Asian buyers except China have ordered 9 million barrels more Saudi crude for loading next month amid the kingdom’s push to cut its prices, Bloomberg has reported, citing unnamed sources.
The Saudis, earlier this month, lowered the official selling price of their flagship Arab Light by $0.30 per barrel above the average of the Oman and Dubai benchmarks, to a premium of $0.30 a barrel above the Oman/Dubai quotes. That’s down from a premium of $0.60 per barrel for the January loadings and the lowest premium in more than five years.
The cut was generally in line with the expectations of refiners in Asia, who had anticipated a decline of between $0.10 and $0.30 per barrel for February loadings of Arab Light to Asia. As a result, Eastern Asian buyers are ramping up their orders.
Saudi oil giant Aramco has also slashed the price of all other grades to Asia by $0.20-$0.30 per barrel. It also cut all OSPs for loadings to the United States by $0.30-$0.40 a barrel, and all crude grades bound for Northwest Europe and the Mediterranean by $.0.40 per barrel, according to the pricing list, as cited by Reuters.
Meanwhile, developments that could reverse Saudi oil pricing policy are unfolding in the Middle East. A rift between the two closest OPEC members – Saudi Arabia and the UAE – has deepened in Yemen, driving international benchmarks higher. Earlier this week, the Saudi side accused the Emiratis of helping a separatist Yemeni leader leave the country. Then they recaptured the crucial southern Yemeni city of Aden, CNN reported.
The divergence between the Saudi and the Emirati plans for Yemen has put upward pressure on oil prices recently, countering the effects of the U.S. seizure of the Venezuelan oil industry, with gaining $2 per barrel this week and West Texas Intermediate adding over $1 per barrel since Monday.
