Saudi Crude Price Cut Will Add To Asia’s Light Oil Glut

Clyde Russell, Reuters

Saudi Aramco’s decision to cut prices for lighter grades of oil for customers in Asia is a sign of just how seriously the world’s top crude exporter is taking its battle with U.S. shale and other producers outside last year’s move to cut output.

The Saudi Arabian state oil company lowered the official selling price (OSP) of its benchmark Arab Light grade by 30 cents a barrel for May cargoes destined for Asia, which buys about two-thirds of the kingdom’s exports.

This took the OSP to a discount of 45 cents a barrel to the regional benchmark Oman-Dubai. It was the second straight month that Aramco cut the price, even though the Saudis are the major player in the agreement between producer group OPEC and its allies to cut output by 1.8 million barrels per day (MMbb/d) in the first six months of the year.

Aramco also reduced the OSP for its Arab Extra Light grade by 35 cents a barrel to a premium of 60 cents over Oman-Dubai for May-loading cargoes for Asian customers and for Super Light by 20 cents. In contrast, the OSPs for Arab Medium and Heavy were left unchanged.

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