Saudi Aramco, the leading oil exporter, has requested that Asian buyers increase their crude oil purchases in October.
This comes after Saudi Arabia significantly reduced prices for all crude grades, more than anticipated, due to an expanding supply, according to a Reuters report.
Two sources familiar with the matter revealed in the report that the oil giant encouraged these buyers to increase their crude oil purchases for October.
During this week’s APPEC conference in Singapore, Saudi Aramco engaged in discussions with various Asian buyers, actively seeking to regain its market share.
This strategic move highlights Saudi Aramco’s proactive efforts to re-establish its dominance in the global oil market amidst fluctuating demand and competitive landscapes.
The company’s representatives leveraged the influential platform of the APPEC conference to directly appeal to key regional clients, aiming to secure larger commitments for the upcoming month.
This has contributed to a delay in the allocation of the October supply to its customers, potentially until next week, according to one of the sources in the report.
Pricing and production adjustments
For October, the state oil producer has adjusted the price of its benchmark Arab Light crude destined for Asian markets.
The new price is set at $2.20 per barrel above the average of Oman/Dubai crude benchmarks.
This represents a reduction of $1 per barrel compared to the September price, which had reached a five-month high. This adjustment reflects a shift in pricing strategy following a period of elevated prices.
The reduction in crude oil prices was a direct consequence of a pivotal weekend meeting held by the Organization of the Petroleum Exporting Countries and its key allies, notably Russia.
During this crucial gathering, the collective made a significant decision to increase oil production by 137,000 barrels per day, a measure slated to take effect in October.
The decision by OPEC+ reflects a strategic maneuver to adjust global oil supply dynamics, often influenced by a complex interplay of factors including market demand, geopolitical considerations, and the economic interests of member nations.
Saudi Aramco, at the helm of the group, which collectively accounts for approximately half of the world’s oil production, has already significantly increased its production targets.
Since April, OPEC+ has boosted its output by an additional 2.5 million barrels per day (bpd).
This increase is a substantial amount, equivalent to roughly 2.4% of the total global oil demand.
Market share and outlook
This strategic move by the group underscores its pivotal role in influencing global oil supply and, consequently, international energy markets.
The consistent rise in production targets by such a major player signals ongoing adjustments to global energy needs and economic landscapes.
The recent action by OPEC+ suggests a strategic shift towards prioritising market share, even at the potential cost of price reductions, according to analysts.
Increased oil production, while currently absorbed by strong Middle East demand, is anticipated to create a global market surplus, pushing Brent crude prices below $60 per barrel.
In September, Saudi Arabia’s crude oil exports to China, its primary importer, decreased to approximately 43 million barrels from 51 million barrels in August.
On Thursday, Brent crude futures saw a slight decline to $67.38 a barrel. This dip was primarily driven by concerns regarding weakening US demand and the broader risks of oversupply.
However, the losses were mitigated by ongoing worries about attacks in the Middle East and the conflict in Ukraine.
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