State producer Saudi Aramco reduced its flagship Arab Light price to Asia by US$2 ($2.66) to US$1.50 a barrel above the benchmark. That’s bigger than a US$1.25 a barrel reduction estimated in a Bloomberg survey of refiners and traders. Aramco also cut all prices for February delivery to Northwest Europe, the Mediterranean and North America.
Global crude prices declined in 2023 for the first time since 2020. The market has so far shrugged off concern over the Israel-Hamas war and deepening Middle East turmoil. Attacks by Houthi militants on merchant vessels transiting the Red Sea also haven’t yet resulted in supply disruptions.
The OPEC+ group’s production cuts are also aimed at preventing a buildup of oil in storage, amid concern a sluggish economy will crimp global demand. Saudi Arabia is taking on the bulk of the burden, with voluntary cuts of 2 million barrels a day through the first quarter and possibly longer.
