(Bloomberg) -- Saudi Arabia slashed its official crude oil selling prices to Asia by the most since February after OPEC+ output cuts that aim to curtail weakness in physical markets.
State-owned Saudi Aramco lowered its flagship Arab Light price to Asia for January by 50 cents to $3.50 a barrel more than the benchmark, according to a price list. While that's less than the $1.05 a barrel reduction estimated in a Bloomberg survey, it is also the first time since June the kingdom has reduced the value of its flagship grades.
The Saudi price cuts mark a concession that nearby markets have weakened amid surging supply from producers outside of the Organization of Petroleum Exporting Countries and its allies. In particular, sweet or low-sulfur crudes, which are normally more expensive because they yield more valuable fuels, have been selling at very cheap prices in recent weeks, thanks in part to strong US exports.
Last week, OPEC and its allies agreed to reduce joint supplies by more than 2 million barrels a day, with about half of that coming from Saudi Arabia, in a bid to tame a market surplus. The cuts can “absolutely” continue past the first quarter if needed, Saudi Energy Minister Prince Abdulaziz bin Salman said in an interview on Monday.
In addition to cutting all of its prices to Asia, Saudi Arabia also trimmed some supplies to the US. Those values have been held at record levels over the last few months, resulting in a slump of shipments destined for America.
There were also sharp decreases in prices for Europe — another region that has been squeezed by sky-high values in previous months and where there have also been signs of softer demand in recent weeks.
--With assistance from Sherry Su and Bill Lehane.
(Updates with additional prices from fifth paragraph.)
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