Saudi Aramco, the world’s largest crude exporter, has implemented a price reduction for all its oil grades destined for Asia for the second consecutive month, indicating a perception of ongoing demand softness in its key market.
The state-owned oil giant lowered the official selling price for August shipments of the crude grade by $0.60 to $1.80 per barrel over the Oman/Dubai average. This move underscores the challenges faced by OPEC producers amidst significant supply growth from non-OPEC nations.
Market expectations and surveys anticipated a deeper price cut for the Arab Light grade to Asia, predicting a reduction of $0.90 per barrel. Despite this, oil prices have shown resilience in recent weeks amid reduced Aramco exports, with June international shipments hitting a 10-month low. Brent crude prices rebounded from a previous dip to surpass $85 per barrel, supported by ongoing geopolitical tensions in the Middle East and concerns over Hurricane Beryl impacting U.S. production facilities.
In the previous month, the OPEC+ coalition, led by Saudi Arabia and Russia, outlined production targets until the end of the next year. While some members had committed to scaling back additional output reductions starting in October, this move led to a dip in Brent prices to levels not seen since February. There were concerns that weaker demand growth might not absorb the surplus supply.
Saudi Arabia, a leading OPEC producer and the group’s de facto leader, emphasized the group’s readiness to reconsider the planned output increases based on evolving market conditions. Subsequently, prices recovered from the post-meeting lows.
Saudi Aramco also announced a price increase of 90 cents for all grades to Northwest Europe and the Mediterranean for August. Minor price adjustments were also made for some U.S. destinations.
