Saudi Arabia, the world’s top crude oil exporter, on Thursday cut the prices of all its crude grades loading for Asia in February to the lowest level to regional benchmarks in more than a year, as demand concerns continue to prevail.
Saudi Aramco, the state oil giant, cut the official selling price (OSPs) of its flagship crude grade, Arab Light, to Asia for February by $1.45 per barrel, setting the price at $1.80 a barrel above the Dubai/Oman benchmark. The premium to the Dubai/Oman average is the lowest since November 2021, but it was generally in line with expectations.
Earlier this week, a Reuters survey of analysts showed that Saudi Aramco was widely expected to cut its OSPs to Asia for February, following a cut for the January loadings to a 10-month-low.
Last month, Saudi Arabia cut the price of the crude it would sell to Asia in January to a 10-month low versus the regional benchmarks, which had weakened amid signs of lackluster demand in the world’s most important oil-importing market.
The forecasts in the Reuters survey were in line with the actual cut announced today—analysts had expected the price of the Arab Light crude grade to be cut by $1.50 per barrel for February shipments to a premium of just $1.75 per barrel over Dubai/Oman.
Aramco, which generally doesn’t comment on the OSPs, also lowered the prices of its crude loading in February to northwest Europe and the Mediterranean region, while prices for the U.S. remained unchanged.
The cut in Saudi oil prices isn’t a surprise for the market or analysts, considering the growing concerns about immediate demand in China and the world. Oil prices had the worst start to a year in more than 30 years after tumbling by 9% in just two days.