Saudi Arabia cuts crude prices for Asian customers

RIYADH: Oil prices were little changed, as gains on production outages after Hurricane Ida were tempered by Saudi Arabia’s decision to slash prices of all crude grades to its Asian customers in October, Arab News reported.

The prices of Saudi crude for its remaining customers in the US and Northwest Europe remain unchanged.

The reduction in crude contract prices for Asia, which accounts for more than 60 per cent of the Saudi oil exports, indicates efforts to increase its market share, buyers say.

Saudi Aramco reduced the official sale price of Arab light crude for the first time in four months by $1.30 a barrel to a premium of $1.70 per barrel over regional benchmark crude.

The price cut was $1.30 for October versus September, the largest monthly reduction in a year.

The energy giant also cut the prices of all items by 10 cents a barrel for buyers in the Mediterranean region.

Brent crude futures for November were up 3 cents, or 0.04 per cent, to $72.64 per barrel by 1354 GMT.

The US West Texas Intermediate crude for October was at $69.33 a barrel, up 4 cents, or 0.06 per cent. Both contracts were down over $1 in earlier trade.

Both contracts had been down more than $1 in earlier trade.

“The OSPs to Asia are bearish, signaling softer demand and potentially higher supply,” Energy Aspects analyst Virendra Chauhan said.

Global oil supplies are increasing as the Organization of the Petroleum Exporting Countries and its allies, a grouping known as OPEC+, is raising output by 400,000 barrels per day each month between August and December.

“Given that OPEC+ is continuing its plan to raise production monthly, despite weak data from China and the US raising slowdown fears, and Saudi Arabia looking for market share in the region, oil is likely to remain under pressure,” said Jeffrey Halley, a senior market analyst for the Asia Pacific at brokerage OANDA.

The decline in crude futures added to falls on Friday after a weaker than expected US jobs report indicated a patchy economic recovery that could mean slower fuel demand during a resurgent pandemic.

Losses were capped by concerns that US supply would remain limited in the wake of Hurricane Ida.

The US government is releasing crude from strategic petroleum reserves as production in the US Gulf Coast struggled to recover.

Some 1.7 million barrels of oil and 1.99 billion cubic feet of natural gas output remained offline, government data released on Friday showed, while power shortages are preventing some refineries from resuming operations.

The hurricane also led US energy firms last week to cut the number of oil and natural gas rigs operating for the first time in five weeks, data from Baker Hughes showed on Friday. The oil rig count fell the most since June 2020.