Saudi Arabia has set the official selling price (OSP) for its flagship Arab Light crude oil in Asia at $2.40 per barrel above the Oman/Dubai average, according to a document seen by Reuters on Wednesday.
This is 50 cents per barrel lower than June's OSP, marking the first price cut in five months and nearing the lower limit of market expectations in a Reuters survey.
The document also shows that the OSP for other crude grades sold to Asian customers was reduced by 40 to 60 cents.
Refinery sources anticipated Saudi Aramco would lower its prices in Asia due to dropping benchmarks for Middle Eastern crude and declining refining margins in Asia.
Asia accounts for 82% of Saudi Arabia’s oil exports, and the potential price cut reflects the pressure faced by OPEC members amid strong non-OPEC supply growth and global economic headwinds.
OPEC agreed on June 2 to extend most of its deep production cuts until 2025 to address weak demand growth and high US production.
The document also shows Aramco set the OSP for Arab Light crude in Northwest Europe at $3.10 per barrel above ICE Brent crude, a $1 increase from June.
Aramco also raised the OSP for all crude grades in Northwest Europe and the Mediterranean by $1 per barrel.
For US buyers, the OSP for Arab Light crude was set at $4.75 per barrel above the ASCI, with all July OSPs for the US remaining unchanged from June.
Aramco sets its crude prices based on customer feedback and the calculated changes in the value of its oil over the past month, reflecting shifts in output and product prices.
Saudi crude OSPs set the trend for the prices of Iranian, Kuwaiti, and Iraqi oil, affecting about 9 million barrels per day of crude shipped to Asia.
