(Bloomberg) -- Saudi Arabia cut pricing of its flagship crude grade for its main market in Asia next month as concerns mount over waning demand.
State-owned Saudi Aramco lowered the official selling price of its Arab Light crude for buyers in Asia by 70 cents to $1.30 a barrel against the regional benchmark, according to a price list seen by Bloomberg. The company was expected to reduce the grade by 85 cents a barrel, according to a survey of traders and refiners.
Oil plunged earlier this week on deepening concerns about soft demand, giving up all its gains for the year. Futures failed to recover ground even after the OPEC+ alliance on Thursday agreed to pause a planned output hike for two months. Key coalition members won’t go ahead with the scheduled increases of 180,000 barrels a day in October and November, according to delegates.
The delay in starting to bring back more barrels could leave Saudi Arabia exporting less than 6 million barrels a day, as it has for the past three months.
With concerns persisting that sluggish oil use in China will leave extra crude in the market, Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries, appears hesitant to add volumes. Weaker refining margins in Asia are also limiting Aramco’s scope for bolstering prices.
Many market watchers see stockpiles building through the end of this year and into 2025. Analysts including Citigroup Inc. saw a risk that Brent could dip below $70 a barrel if OPEC+ had gone ahead with its planned easing.
Aramco also cut prices for its crude to Northwest Europe by about 80 cents a barrel across grades and trimmed prices for oil to North America by 10 cents a barrel.
Demand worries have also been at the forefront of investors’ minds in the US, where motor fuel demand has been largely disappointing in the summer and refining margins have plunged to the lowest since 2021. This comes despite US crude inventories draining to the lowest since in a year.
--With assistance from Sherry Su and Devika Krishna Kumar.
(Adds more pricing data and context in paragraph 7 and 8)
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