Saudi Arabia Slashes Oil Prices to Lure Customers

Saudi Arabia is cutting the September official selling prices for all its grades and to all markets, except for the United States, as it aims to entice more buyers after increasing oil supply to offset production and export disruptions elsewhere.

The Arab country’s state-held oil giant Saudi Aramco reduced prices for next month for all the oil grades it sells to its biggest market, Asia. The pricing for the Saudi flagship grade, Arab Light, was reduced by $0.70 to $1.20 a barrel premium over the Dubai/Oman benchmark, used for pricing oil to Asia, Oil Price reported.

The reduction of $0.70 was deeper by $0.10 than the median estimate of five traders surveyed by Bloomberg.

The cut in Arab Light prices for September was the second consecutive monthly reduction of OSP to Asia.

In July, while it was opening the taps, Saudi Arabia also cut its official OSPs for most of its grades to the Asian markets for August, in a sign that it wants to attract more customers now that it has raised production.

The OSP for Arab Light for Asia was reduced by $0.20 to a premium of $1.90 above the Dubai/Oman benchmark.

This was the first cut in Arab Light pricing for Asia in four months and a drop from the highest OSP since July 2014.

Last month, Saudi Arabia was also said to be offering extra oil on top of its contractual volumes to some buyers in Asia, as OPEC’s largest producer boosted oil production to keep markets well-supplied amid disruptions from Venezuela and Libya and the expected reduction of Iranian oil exports.

The Saudis and other Middle Eastern oil exporters compete with North Africa, Russia, Latin America and, in recent months, the United States, for market share in the prized Asian market.

For September, Saudi Arabia also reduced the pricing for all its grades to the Mediterranean and Northwest Europe but raised all prices to the US market.