Saudi Arabia cut pricing for November oil sales to Asia and the US, as the world’s largest crude exporter seeks to keep its barrels competitive with rival suppliers amid sluggish demand.
Saudi Arabian oil company Aramco reduced its official selling price for medium-grade crude to Asia next month to a discount of $3.20 a barrel below the regional benchmark, compared with a $1.30 discount for October sales, the company said in a statement.
The discount for the medium grade to Asia, the main market for Saudi crude, widened by the most since the state-owned company made a cut of $2 per barrel in February 2012, according to data compiled by Bloomberg.
The cut was smaller than the median estimate of a $1.90 a barrel reduction expected by seven refiners and traders in Asia surveyed by Bloomberg last week. The decrease was the deepest since January.
The company trimmed November pricing for its light, medium and heavy grades to the US by 30 cents a barrel each. Medium crude will sell at a discount of 85 cents a barrel to the regional benchmark, the widest since March.
Saudi Aramco widened the discount for Arab Light crude to Asia by $1.70 a barrel to $1.60 a barrel less than the benchmark, according to the statement.
“They needed to cut pricing to keep Saudi crude competitive with other grades,” Robin Mills, a Dubai-based analyst at Manaar Energy Consulting, said. “Demand has been a bit weaker, leading to the cuts.”
Brent Crude, a global benchmark, tumbled almost 50% last year as Saudi Arabia and other OPEC members chose to protect market share instead of decreasing output to boost prices.
The company raised price levels for the same three grades for buyers in Northwest Europe. It trimmed pricing for the Mediterranean region.
OPEC, of which Saudi Arabia is the largest producer, decided in December and again in June to keep its production target unchanged at 30 million barrels a day. The group has exceeded this official target every month since May 2014.
Saudi Arabia boosted output to a record 10.48 million barrels a day in June, according to the International Energy Agency. The kingdom pumped 10.3 million barrels daily last month as it exited its peak summer period for domestic demand.
