Saudi Arabia may cut the price of its flagship Arab Light for March delivery yet again, Reuters has reported, citing trading sources it did not name.
The price cut would be for Asian buyers, according to the sources. If it materializes, the Arab Light price cut would push the flagship grade to a discount to the Middle Eastern benchmark for the first time since 2020, the publication noted in its report.
The Saudi Arabian energy major has been cutting its official selling prices for three months in a row but so far Arab Light has still traded at a premium to the Oman-Dubai benchmark. With the new cut, if it happens, the price would come in at a discount of between $0.20 and $0.55 per barrel below that benchmark. Arab Light for February delivery was priced at a $0.30 premium to Oman-Dubai.
Saudi Arabia typically announces its crude pricing for the following month around the fifth of each month and doesn’t comment on price changes. It also sets the tone for the pricing of the other major oil producers in the Middle East, influencing the pricing policy of about 9 million barrels per day of exports from the Arab Gulf region.
The recent price revisions reflect a well-supplied market, with most analysts of the perception that there is more supply of crude oil than there is demand for the commodity. However, the recent production outages in the United States, estimated at up to 2 million barrels daily have pushed international benchmarks significantly higher, suggesting the perception may not be 100% accurate.
In addition to the supply outages in the world’s largest oil producer, there is also growing supply disruption risk in the Middle East, after President Trump warned Iran “time was running out” on agreeing a nuclear deal with the United States. The U.S. is moving a “massive Armada”, per Trump, to the Middle East. Iran’s Foreign Minister responded that the country’s military was ready, “with their fingers on the trigger” to “immediately and powerfully respond” to any attack, the BBC reported today.
By Irina Slav for Oilprice.com
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