RIYADH (Kashmir English): The world’s largest producer of crude oil, Saudi Arabia, has stated that Crude oil was being sold to Asian buyers at much lower prices.
This marks the biggest drop in monthly prices of the oil in at least 25 years because increased oil coming through the Strait of Hormuz intensifies global competition.
State-owned oil giant Saudi Aramco said that it had reduced the official selling price for Arab Light crude destined for delivery this month by $11 per barrel from its previous rate of $1.50 less than the regional benchmark for Asian markets.
That makes the pricing differential between crude produced in Saudi Arabia and sold elsewhere the lowest since 2020, according to Reuters calculations based on published figures. And it reflects the biggest monthly drop in prices since at least 2000, according to market data provider S&P Global Platts.
The change came after an interim US-Iran peace deal cleared the way for oil shipments blocked by regional tensions to flow freely along the Strait of Hormuz – one of the world’s busiest energy shipping routes.
That has led to increased volumes of crude hitting markets where fierce competition drives down prices amid growing concerns over climate change.
“Rather than signaling the beginning of a market share battle, the decline highlights that there are simply too many prompt cargoes on offer at current levels,” noted Oil Analyst Ahmed Mehdi of Renaissance Energy Advisors. “This is due to the normalisation of trade via the Strait of Hormuz after some recent disruptions.”
Global crude prices fluctuated within a mixed trading range amid the sharp drop in Saudi oil prices, but stronger-than-anticipated demand for refined petroleum products countered much of the selling pressure.
The country’s past use of both price reductions and production changes shows it is comfortable manipulating market forces, albeit gradually, given its commitment to ramping up output as part of deals struck between members of the OPEC+ alliance.
