Saudi Arabia has cut its official selling prices for January oil deliveries, with Asian customers now paying just $0.60 a barrel above the Oman/Dubai benchmark. Carsten Fritsche, commodities analyst at Commerzbank, notes that the move, the lowest premium in five years, reflects weak demand and may prompt other OPEC countries to cut their prices as well.
OPEC is likely to follow Saudi Arabia’s example in pricing
“Saudi Arabia lowered official selling prices for oil shipments in January. Customers in Asia now only need to pay a premium of 60 US cents per barrel on top of the benchmark Oman/Dubai price for Arabian Light.”
“In December, the premium was $1, and in November it was more than $2. The last time the premium was less than the following month was five years ago, during the coronavirus pandemic.”
“At the time, official selling prices have been significantly negative in some cases. Saudi Arabia appears to be unable to bring high export volumes to the market except at low selling prices, indicating that demand is weak. Other OPEC countries are also likely to adjust their selling prices downward in the coming days, with Saudi Arabia typically setting the pricing tone.”
