Saudi Arabia lowers oil prices in Asia to win back buyers |
[ Time:2021-09-09 | Hits:227 ] |
| According to the world petroleum report on September 6, Saudi Arabia's oil sales price to Asia next month will be more than twice as low as expected, indicating that the world's largest crude oil exporter hopes to attract buyers to buy more oil. Saudi Aramco, a state-owned producer, is lowering its pricing for all its grades to its largest market in Asia. As the coronavirus pandemic seriously undermined the recovery of energy demand, the company's official sales price rose for three consecutive months, causing pain to the refinery. However, with Brent crude oil rising by 40% this year, OPEC + believes that there is sufficient demand and there may be a shortage before the end of the year, enabling it to increase production. This growth means that more oil will compete for cautious buyers. Saudi Arabia sells all its oil to refineries on long-term contracts and may alienate customers if its monthly pricing is too high. Giovanni staunovo, commodity analyst at UBS Group AG, said: "due to the high OSPs in Saudi Arabia in the past few months, traders turned to the spot market instead of using long-term contracts." now Saudi Aramco wants buyers to buy more Saudi Crude oil. He said that with the stabilization of domestic demand in autumn, they have more crude oil for export, Therefore, this is another reason to provide more attractive OSPs. Saudi Aramco said in a statement that it would cut the price of its main oil grade Arab light crude oil by US $1.30, US $1.70 higher than the benchmark price in the region. A survey of six Asian traders and refiners last week showed that Saudi Aramco had been expected to reduce the price of this level of oil by about 60 cents a barrel. Asian refiners, Saudi Aramco's largest customer, were surprised by the extent of the cuts. Buyers said that the production reduction showed that Saudi Arabia was trying to compete with other manufacturers in price and seize market share from competitors. These refiners have been affected by fluctuations in demand that inhibit profits from converting crude oil into fuels such as gasoline and diesel. More than 60% of Saudi Arabia's crude oil is exported to Asia, and South Korea, Japan and India are the largest buyers. Saudi Aramco will maintain its oil prices to the United States and northwest Europe in October. For Mediterranean buyers, Saudi Aramco cut prices by 10 cents / barrel at all levels. Staunovo said Aramco did not intend to increase sales in the United States because the country used strategic reserves. Oil refineries along the Gulf coast of the United States closed after Hurricane IDA devastated the region. OPEC decided this month to continue to cut its production reduction plan implemented last year to support oil prices because of the sharp drop in demand caused by coronavirus. Led by Saudi Arabia and Russia, OPEC and its partners are acting cautiously to bring oil back to the market. In July this year, OPEC agreed to increase production by 400000 barrels a month from August to cancel the production reduction plan in the next year. Demand has improved from last year's trough, and OPEC + production cuts have also helped support the market. Brent crude oil traded at about $73 a barrel last week. |