Saudi Arabia cut official selling prices (PSOs) of its oil exports to Asia in October more than expected, in a move seen as the world’s largest exporter of crude trying to maintain and increase its market share, while Asian fuel demand is recovering from a recent fall weeks.
Saudi Aramco reduced its PSOs for Asian markets to all grades it sells. The cuts, the first in three months, range from $ 1.00 to $ 1.30 a barrel. Arab Light, the UK’s flagship crude oil grade, will sell in Asia at a premium of $ 1.70 per barrel over the Oman / Dubai benchmark in October, following a massive 1 , $ 30 compared to the September price of $ 3.00 above Oman / Dubai. Eastern exporters set a price of crude oil destined for Asia.
The price of Saudi crude generally sets the price trend for Asia for other Gulf oil producers, such as the United Arab Emirates (UAE), Kuwait, Iraq and Iran. Saudi Aramco’s price affects up to 12 million barrels per day (bpd) of Middle East crude oil levels going to Asia.
The Saudis have left U.S. and European prices unchanged since September and slightly reduced prices in the Mediterranean region, by $ 0.10 for all grades charged in October, according to a price list which Reuters has compiled.
Last month, Saudi Arabia raised crude oil freight prices for Asia in September, in a widely anticipated move that followed the strongest oil benchmarks in the Middle East.
This month’s price rise for Asia, however, surprised traders early Monday, when oil prices lost more than 1%, while some participants interpreted the sharp cuts as a sign that the Saudi Arabia is worried about demand in Asia.
Others believe that the aggressive price cuts are a step to recover Asian customers who, frightened by recent high PSOs in long-term contracts, according to which the Saudis sell all their oil, have resorted to the spot market and other countries to a cheaper price crude supply.
By Tsvetana Paraskova for Oilprice.com
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