Saudi Arabia, the world’s leading oil exporter, has decreased its crude oil prices for Asian buyers for the month of April.
This marks the first price reduction in three months and aligns with market expectations and the recent OPEC+ decision to gradually increase oil supply starting in April, Reuters reported on Friday.
The price reduction reflects a change in market dynamics and the anticipation of increased supply.
The Organization of the Petroleum Exporting Countries and allies, including Saudi Arabia, agreed to gradually raise oil production from April.
The move by Saudi Arabia to lower prices for Asian buyers is seen as a strategic decision to maintain its market share and competitiveness in the Asian market.
By adjusting its prices in line with market expectations and the OPEC+ decision, Saudi Arabia aims to ensure a steady flow of oil to its Asian customers and support the ongoing economic recovery in the region.
Saudi Aramco, the state oil company, has decreased the April official selling price (OSP) for its flagship Arab Light crude.
Oil prices lowered
The price has been lowered by 40 cents to $3.50 a barrel above the average of Oman and Dubai prices, as per a pricing document from the producer.
In the previous month, Arab Light’s OSP reached its highest point in over a year, climbing to $3.90 above the average prices in Oman and Dubai.
This surge was primarily attributed to the stricter sanctions imposed by the United States on Russian oil exports.
These sanctions caused significant disruptions in the global oil trade, leading to a sharp increase in both oil prices and freight rates.
The resulting market volatility and uncertainty further contributed to the upward pressure on Arab Light’s OSP.
The company has implemented a price reduction for Arab Light crude oil in the Asian market for the month of April.
This decrease aligns with the predictions from a Reuters poll, which anticipated a price cut ranging between 20 and 65 cents.
Additionally, the company has also lowered its April prices for other grades of crude oil that it supplies to the Asian market.
OPEC to raise oil supply
OPEC+, the group of oil-producing countries that is responsible for approximately half of the global oil supply, made the decision this week to move forward with a planned increase in oil output.
This increase, set at 138,000 barrels per day, is scheduled to take effect in April and marks the group’s first production increase since 2022.
The group is set to unwind some of its 2.2 million barrels per day of voluntary production cuts next month.
The cuts were extended multiple times last year due to weak global demand, particularly in China. China is the world’s largest importer of crude oil.
However, OPEC’s decision earlier this week came as a surprise to the market.
Experts and analysts had expected the cartel to extend the production cuts by another three months as global supply is likely to outstrip demand comfortably this year.
Meanwhile, China’s supply concerns are easing due to a rebound in Russian and Iranian oil imports this March.
Non-sanctioned tankers, attracted by lucrative payoffs, are driving the increase in oil supply to China, the world’s largest oil importer.
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