Saudi Aramco announced the official prices for selling shipments of Arab Light crude to its customers in Asia, Europe and the United States, during the month of June 2023.
The company decided to lower the official Saudi oil selling prices for Arab Light crude to Asia by 25 US cents to $2.55 per barrel, above the Oman/Dubai average, according to the pricing document seen by the specialized energy platform.
Saudi Aramco’s decision to cut prices comes after the decline in oil prices during the recent period, in light of fears of a global economic recession that may limit the demand for crude.
In return, Saudi Aramco raised all prices for European customers and left most grades to America unchanged, Bloomberg reported.
Saudi oil barrel price
The reduction in the price of a barrel of Saudi oil by Aramco for the first time comes after 3 consecutive increases in Arab crude prices, which began in the past March and April, and this May, after its decline to its lowest level in 15 months during February 2023.
The weakness of the US economy and continued fragility among its banks, as well as weak manufacturing data in China, led to renewed declines in Brent and West Texas Intermediate crude futures, as well as refining margins.
A Reuters poll had predicted that Saudi Aramco would cut the price of its main Arab light crude oil to Asia, in June, by about 40 cents.
The decline comes despite the additional reduction in production from OPEC +, as refineries – which have been affected by the decline in fuel prices – are considering reducing production, with the increase in China and India’s appetite for cheap Russian oil.
And Saudi Aramco had raised the selling prices for Arab Light crude shipments to Asia by 30 US cents to $2.80 per barrel, above the average prices of the Sultanate of Oman / Dubai during the month of May (2023).
Oil refining in Asia
Middle East refining margins in Asia hit a 6-month low of $2.35 a barrel last week, diesel margins fell 27% in April, while gasoline margins fell 49%.
Deals trading crude oil from the Middle East in the spot market have also slumped, with some refiners considering operating cuts even as many have already scheduled maintenance for June and August.
Saudi Aramco sells about 60% of its crude shipments to Asia, most of it under long-term contracts whose prices are reviewed every month. China, Japan, South Korea and India are the largest buyers.
Saudi Aramco usually sets its crude prices based on customer recommendations and after calculating the change in the value of its oil over the past month, based on revenue and product prices.
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