2024-01-08 01:30:33
In a blow to its own OPEC strategy of boosting oil prices through cartel production cuts, Saudi Arabia will lower key crude oil prices for buyers in all regions, including its main Asian market, in February, in a context of persistent market weakness, announced the Bloomberg agency.
Oil consumption typically declines during February and March, with refineries taking advantage of the period to close some facilities for periodic maintenance. At the same time, strong global supply, including from the United States, is increasing the likelihood of a surplus that has forced the OPEC+ group, led by Saudi Arabia and Russia, to extend production cuts this year.
State producer Saudi Aramco cut the price of its flagship Arab Light product for Asia by $2 to $1.50 per barrel above the benchmark. That’s larger than the $1.25 per barrel reduction estimated in a Bloomberg survey of refiners and traders. Aramco also cut all prices for February delivery in Europe, the Mediterranean and North America.
Saudi Arabia sells around 60% of its crude oil exports to Asia under long-term contracts, the prices of which are reviewed every month. China, Japan, South Korea and India are the biggest buyers. Its moves tend to be closely followed by other Persian Gulf producers such as Iraq and Kuwait.
The OPEC+ group’s production cuts also aim to prevent the accumulation of stored oil, amid concerns that a sluggish economy could harm global demand. Saudi Arabia is shouldering most of the burden, with voluntary cuts of 2 million barrels a day during the first quarter and possibly longer.
While Saudi Arabia and other OPEC members reduce production, oil producers in the United States increase their production and export mainly to Europe, contrary to OPEC’s strategy of exerting upward pressure on prices.
By Economic Editor
Angola Portal
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