Saudi Arabia lowered most oil prices for Asia, its main market, in a sign the outlook for demand remains fragile amid continued Covid lockdowns in China.
Saudi Aramco cut its key Arab Light grade for January sales to Asia by $2.20 to $3.25 a barrel above the regional benchmark.
The move was in line with refiners and traders’ prediction of a drop of $2.10, according to a Bloomberg survey, and takes the price to its lowest level since March.
Saudi Arabia oil price fluctuation
Brent crude is up 13% this year to almost $88 a barrel. But it has fallen from more than $120 a barrel in June amid increasing concern among investors about rising inflation and a global economic slowdown.
Saudi Arabia’s neighbour and fellow OPEC member Kuwait said that oil customers were reluctant to boost imports next year.
Aramco’s decision came a day after OPEC and its partners, a 23-nation group led by Saudi Arabia and Russia, opted to keep output steady.
The company reduced most prices for European customers, while leaving those for the US unchanged.
Still, Aramco’s official selling prices remain historically high, underscoring the tightness of the physical market, in which actual barrels are bought and sold.
Traders have warned that supply from Russia could fall as the EU tightens sanctions in response to Moscow’s invasion of Ukraine.
In addition, China’s tentative easing of coronavirus restrictions could lead to increased demand in the world’s biggest oil importer.
China, Japan, South Korea and India are the biggest buyers. Its price moves tend to be closely followed by other Gulf producers, including Iraq and Kuwait.
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