Saudi Arabia may cut oil prices for Asia

Saudi Arabia could cut the official selling price for oil to Asian buyers in February after raising them substantially this month.

According to a report citing industry insiders and poll data, the Kingdom could slash the prices for all its export grades by as much as $1 per barrel and more, which would push these prices to their lowest in three to four months.

Earlier this month, Saudi Arabia raised its official selling prices for oil to Asia by $0.60 per barrel, which brought them $3.30 per barrel above the Oman/Dubai benchmark.

The price hike suggested expectations of strong demand, which in turn implied that Saudi Arabia is not all that worried about the Omicron variant that caused a more than $10 plunge in oil prices in late November, with Brent at one point dipping below $70 per barrel.

This month, however, prices have rebounded globally, but the spot market premium for Middles Eastern and Russian grades has fallen by more than 50 percent since the start of the month, Reuters noted in its report. The drop was a result of higher OPEC+ production this month.

The price cut for February is in part a move in anticipation of lower demand from Asian buyers as refineries on the continent prepare for maintenance season in the second quarter of the year, Reuters noted.

Saudi Arabia will announce its official selling prices for oil after the January OPEC+ meeting, to take place on the 4th of the month. Asia accounts for more than half of Saudi oil exports.

Earlier this month, the Kingdom reported crude oil exports accounted for 77.6 percent of total exports in October, up from 66.1 percent a year earlier. The value of oil exports was 123 percent higher than a year ago, thanks to substantially higher crude oil prices.