Saudi Arabia cuts flagship oil price to Asia for a third month

[SINGAPORE] Saudi Arabia dropped the price of its flagship crude grade to Asia for a third month amid persistent signs of oversupply in the market.

State producer Saudi Aramco reduced the price of its Arab Light grade for customers in Asia to a 30 US cent premium to the regional benchmark for February, according to a price list seen by Bloomberg.

The cut comes as the Organisation of the Petroleum Exporting Countries and some of its allies (Opec+) stuck with plans to pause supply increases in the first quarter. In their meeting over the weekend, delegates said they did not discuss Venezuela during the 10-minute video conference, and that it’s premature to gauge how the US’ capture of the South American country’s leader Nicolas Maduro will impact supplies.

Global crude benchmarks retreated by about a fifth last year, with Brent posting its worst annual decline since 2020, on mounting concerns about a worldwide glut following an earlier round of supply hikes from Opec+ and rising output from rival drillers. The International Energy Agency has forecast a glut of about 3.8 million barrels a day for this year.

Middle East crude markets have also weakened, with the forward curve for grades including the Dubai benchmark and Abu Dhabi’s Murban futures slowly giving up their bullish price structures in recent weeks.

Besides Venezuela, geopolitical risks elsewhere continue to cloud the outlook for production among several Opec+ members. They range from exchange of fire between Ukraine and Russia, as well as sanctions from the US on Russia and Iran. A dour outlook from top crude importer China, a top customer for several Opec+ countries, is also weighing on sentiment. BLOOMBERG