Sunday 22 Dec
Saudi Arabia has significantly reduced its oil prices for Asian customers, exceeding market expectations. This move follows the OPEC+ decision to further delay planned production increases, a move that intensifies concerns about a global oil surplus.
Saudi Aramco, the state-owned oil giant, announced that its flagship Arab Light crude will trade at a premium of just 90 cents per barrel above the regional benchmark in January. This represents a substantial decrease from the current $1.70 premium. Market analysts had anticipated a smaller price reduction, closer to $1 per barrel.
Aramco also lowered prices for
buyers in Northwest Europe and the Mediterranean region. However, prices for
North American customers remained unchanged.
Global oil prices have been under
pressure this year due to fears of slowing demand, particularly from China.
This has raised concerns about a potential oversupply in the global oil market
in 2024.
Brent crude, a global oil
benchmark, is currently trading above $71 per barrel. However, trading activity
has been relatively subdued recently due to a fragile ceasefire between Israel
and Hezbollah in Lebanon. This has diminished the risk premium previously
factored into oil prices.
The recent OPEC+ decision to
maintain production cuts until at least January 2024 underscores the growing
concern about an impending oil surplus. This places the group in a challenging
position, forcing them to decide between extending production cuts further into
2025 or risking a significant decline in oil prices.
