Saudi Arabia has slashed oil prices more than expected for Asian buyers after OPEC+ further delayed production increases. This underscores persistent market weakness.
According to pricing documents released on Sunday, state-owned oil giant Saudi Aramco plans to sell its flagship Arab Light crude grade to Asia in January at a $0.90 per barrel premium to the regional benchmark.
This marks a significant drop from the $1.70 premium set for December. Based on surveys of traders and refiners, industry analysts had anticipated a more modest reduction to $1.00.
Aramco also cut prices for buyers in Northwest Europe and the Mediterranean while keeping rates steady for North American customers.
London’s benchmark oil prices have trended downward this year, fueled by concerns of a global supply surplus in 2024, mainly as China’s demand growth slows.
Brent crude is currently trading in a narrow range as the risk premium traders had priced in earlier, largely dissipating the ceasefire between Israel and Hezbollah in Lebanon.
OPEC+, led by Saudi Arabia and Russia, recently agreed to delay a planned production increase scheduled for early January by another three months, following two previous reductions. The group now faces a difficult decision: extend production cuts until 2025 or risk a price collapse due to the looming oversupply concerns.
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