Saudi Aramco Slashes Oil Prices for Asian Buyers After Three-Month High

Saudi Aramco, the state-owned oil giant, has lowered its crude oil prices for Asian buyers in April.

The move comes in response to increased global supply following OPEC+’s decision to raise output and amid easing supply concerns from Russia and Iran.

According to a pricing document released by Aramco on Friday, the official selling price (OSP) for Arab Light crude to Asia was reduced by 40 cents to $3.50 per barrel above the average prices of Oman and Dubai.

The decision aligns with market expectations as a Reuters poll had forecasted a reduction of between 20 to 65 cents.

Last month, Arab Light’s OSP had surged to its highest level in over a year at $3.90, driven by tighter global supply following intensified U.S. sanctions on Russian oil.

The latest price adjustment also extends to other crude grades sold by Aramco to Asia with Super Light, Extra Light, Medium and Heavy crudes witnessing reductions ranging from 30 to 60 cents per barrel.

Analysts suggest that the cuts are a strategic response to the recent increase in supply and are aimed at maintaining Aramco’s market share in its most crucial market.

The decision by Saudi Arabia, the world’s top oil exporter, follows OPEC+’s announcement to proceed with a planned April oil output increase of 138,000 barrels per day, the first since 2022.

The group, which accounts for nearly half of the world’s oil production, appears to be balancing the market amid rebounding Russian and Iranian oil supplies to China, the world’s top crude importer.

Non-sanctioned tankers have reportedly ramped up deliveries to China, alleviating immediate concerns over supply disruptions.

Market analysts indicate that Aramco’s price cut is also influenced by declining demand for long-haul shipments from the U.S. Gulf Coast to Asia, as elevated freight costs and a stronger U.S. dollar erode profitability for Asian refiners.

“Saudi Arabia’s decision to reduce prices is a pragmatic move to retain its market share in Asia, especially with more Russian and Iranian barrels flowing into China,” noted an industry analyst.

Despite the reductions for Asian buyers, Aramco left its prices unchanged for the United States market, with the OSP for Extra Light and Light crudes remaining at $6.05 and $3.80 per barrel above the ASCI (Argus Sour Crude Index) benchmark, respectively.

Prices for Northwest Europe and the Mediterranean were trimmed by 20 to 30 cents per barrel across various crude grades.

As the market absorbs the implications of these adjustments, experts anticipate that Aramco’s pricing strategy will influence other Gulf producers’ decisions in the coming weeks.