Saudi Aramco on Sunday said it would cut crude prices to all regions, including its largest market in Asia — a move that comes amid weaker global oil prices and increased production by producers outside the Organization of the Petroleum Exporting Countries.
In a notice, state producer Aramco 2222, +0.30% said February prices for various grades of Saudi crude, including its flagship Arab light, in Asia would fall $2 a barrel versus the Oman/Dubai regional benchmark from their January levels.
The premium for Saudi crude versus the ASCI index, a benchmark for Gulf Coast sour crudes, will also fall $2 a barrel from January, Aramco said. Prices in northwest Europe and the Mediterranean will be down $1.50 to $2 a barrel versus the ICE Brent crude benchmark versus January prices.
After a summer rally attributed in large part to Saudi Arabia’s decision to implement a production cut of one million barrels a day on top of existing cuts by other members of OPEC and its allies, including Russia, crude set back sharply in the fourth quarter. Saudi Arabia and OPEC+ have extended cuts into 2023.
West Texas Intermediate crude CL00, -0.81% CL.1, -0.79%, the U.S. benchmark, fell more than 21% in the fourth quarter to post a 2023 decline of 10.7%. Brent crude BRN00, -0.77%, the global benchmark, fell around 19% in the fourth quarter to also lose 10.3% in 2023.
Oil bounced last week, finding some support as attacks on shipping in the Red Sea by Iran-backed Houthi rebels operating out of Yemen forced a rerouting of crude and stoked fears of a broader conflict that could further threaten Middle Eastern petroleum flows. The shifts were seen stoking demand for U.S. crude, helping to narrow WTI’s discount to Brent and potentially putting U.S. exports on track to break records, analysts said.
Meanwhile, U.S. oil production has topped 13 million barrels a day, running at or near record levels, helping to ease earlier worries of tight supplies.