Saudi Arabia trims prices for Asia, U.S.
Saudi Arabia cut most oil pricing for its customers in Asia and the U.S. as a resurgence in the coronavirus clouds the outlook for energy markets.
State producer Saudi Aramco decreased December pricing for shipments of Arab light crude to Asia, its largest regional market, by 10 cents a barrel to a 50-cent discount to the benchmark.
Oil dropped around 10 percent last week as European nations including Germany and France announced new lockdowns and daily virus cases hit a record in the U.S. While crude has since recovered most of those losses, the market continues to face headwinds, OPEC Secretary-General Mohammad Barkindo said.
The Organization of the Petroleum Exporting Countries, led by Saudi Arabia, agreed with Russia and other producers in April to pump less oil to prop up the market.
The supply cuts by the alliance, known as OPEC+, caused oil prices to rally, but benchmark Brent crude is still down 38 percent this year at $41a barrel.
Brent will probably continue ranging between $38 and $43 a barrel, according to Ibrahim Al-Buainain, head of Aramco’s trading unit. That’s far below
what most members of the cartel, including Saudi Arabia, need to balance their budgets.
Aramco cut prices for all U.S. grades by 20 cents and raised them by as much as $1 for the northwest Europe and Mediterranean regions. The company shipped almost two-thirds of its oil exports last month to Asia or the U.S., tanker tracking data compiled by Bloomberg show.
OPEC+ is considering keeping production at current levels into 2021 instead of easing the supply cuts at the start of January, as was originally planned. With Europe’s lockdowns and refinery profits dwindling, even Aramco’s Al-Buainain doubts the market needs more crude.
The producers’ group will meet Nov. 30 and Dec. 1 to review its output policy.
Saudi Arabia’s pricing deci
sion usually sets the tone for other Middle Eastern suppliers, including Iraq and the United Arab Emirates, the second- and third-largest producers in OPEC.