Saudi Arabia cuts Asian flagship oil prices for the third month in a row to deal with oversupply

The Zhitong Finance App learned that due to continued signs of oversupply in the market, Saudi Arabia lowered the price of its flagship crude oil grade in Asia for the third month in a row. According to a price list, Saudi Aramco lowered the price of Arabian light crude oil for Asian customers in February to a premium of 30 cents over the regional benchmark price. This price reduction is basically in line with the expectations of traders and refiners. Saudi Aramco also cut prices for all of its crude grades in all other regions, including the US and Europe.

The price cut comes as OPEC and some of its allies stick to their original plan — suspending production increases in the first quarter. At the conference held over the weekend, participants said they did not discuss the Venezuelan issue during the 10-minute video conference, and it is still too early to assess how the US arrest of Venezuelan leader Maduro will affect oil supply.

Last year, the global crude oil benchmark price fell by about one-fifth. Among them, Brent crude recorded the biggest annual decline since 2020. Previously, the increase in OPEC+ production and the increase in competitors' production raised concerns about the global oversupply of crude oil. The International Energy Agency predicts that there will be an excess of 3.8 million b/d of global crude oil supply this year.

The Middle East crude oil market is also showing weakness. Various crude oil forward curves, including Dubai's benchmark crude oil and Abu Dhabi Murban crude futures, have gradually erased the previous upward momentum in recent weeks.

In addition to Venezuela, geopolitical risks in other regions also continue to affect the production prospects of many OPEC+ member countries. These risks include the war between Ukraine and Russia, as well as US sanctions against Russia and Iran. As a major customer in several OPEC+ countries, expectations of a weak Asian economy also weighed on market sentiment.