Saudi Arabia studies the application of discounts to the price of oil sold in Asia

The world’s leading oil exporter, Saudi Arabia, It could implement sharp price cuts for crude it sells to Asia in February, after a barrel on the international market and spot prices in the Middle East plummeted this month, industry sources said.

The kingdom is expected to cut official selling prices (OSP) of all grades of crude by more than $ 1 in February from the previous month, lowering prices to their lowest levels in three to four months, a survey by Reuters to seven oil traders.

This comes after the spot premiums for Russian and Japanese grades middle East that are loaded in February fell by more than half this month, as supply shortages were alleviated by higher production from the OPEC + alliance and following the releases of crude from strategic reserves among major consuming countries.

On the other hand, demand from Asia is forecast to slow as refineries prepare for seasonal maintenance in the second quarter. The region accounts for more than half of Saudi Arabia’s exports.

The backwardation situation in the Dubai benchmark market, where immediate prices are higher than those in future months, has dramatically lessened this month, an indication that supply shortages are diminishing.

“Dubai’s backwardation structure is weaker and price gaps between distillates have improved, making Arab Medium and Arab Heavy less value than light grades,” said a trader consulted.

Leave a Comment