Saudi Arabia has reduced its oil prices for May shipments to Asia, marking a four-month low, as the OPEC+ alliance prepares for an increase in supply. Saudi Arabia, recognized as the leading oil exporter globally, announced on Sunday a significant reduction in crude oil prices for Asian buyers for May, marking the lowest prices seen in four months. This decision comes in the wake of a surprising move by the OPEC+ oil coalition to accelerate increases in oil production.
May Arab Light crude oil prices for Asia have experienced a significant decline, dropping by $2.30 per barrel, marking the largest decrease in more than two years. Other grades have experienced a decline of $2.30 per barrel. In May, prices for crude oil destined for the U.S. and Europe experienced declines of 20 and 50 cents per barrel, respectively. OPEC+ has announced an increase in oil production, set to rise by 411,000 barrels per day starting in May.
Saudi Aramco, the state oil company, has announced a reduction in the May official selling price (OSP) for its flagship Arab Light crude. The price has been lowered by $2.30, now set at $1.20 a barrel above the average prices of Oman and Dubai, according to a pricing document released by the producer. The recent decline represents the most significant drop in over two years, marking the second consecutive month that Aramco has reduced its prices, according to Reuters’ records of Saudi Official Selling Prices (OSPs). The company has announced a reduction in May prices for additional grades sold to Asia, decreasing them by $2.30 per barrel.
In a surprising move, eight OPEC+ nations announced on Thursday their decision to expedite the timeline for phasing out oil output cuts. The group will increase production by 411,000 barrels per day in May, a figure that is three times higher than analysts had anticipated, accounting for approximately 0.4% of the global oil supply. Recent developments, coupled with a rising global trade conflict, have resulted in a significant decline in oil prices, which fell nearly 11% in the week ending April 4, reaching levels not seen in over three years.
Before the recent announcement from OPEC+, analysts polled by Reuters had anticipated a reduction in Arab Light pricing for Asia by $1.80 to $2, reflecting the significant drops in benchmark prices observed in March. In March, the spot premium for Dubai crude averaged $1.38 per barrel, a notable decrease from the February average of $3.33 per barrel. The decline can be attributed to an increase in Russian supply re-entering the Asian market, a shift that follows the disruptions experienced in January and February due to U.S. sanctions on Russian energy trade.