Saudi Arabia, recognized as the world’s leading oil exporter, has announced a significant reduction in crude oil prices for Asian markets. Effective in May, the prices have been lowered to their lowest levels in four months.
This decision comes in light of the OPEC+ coalition’s unexpected move to accelerate oil output hikes. State-owned Saudi Aramco has reduced the official selling price (OSP) for its flagship Arab Light crude by $2.30, now set at $1.20 per barrel above the average prices of Oman and Dubai, as indicated by the company’s pricing document.
This decrease represents the largest drop in over two years and marks the second consecutive month that Aramco has lowered its prices, according to records from Reuters. In addition to Arab Light, Saudi Aramco also decreased the May prices of other grades sold to Asia, reflecting a uniform reduction of $2.30 per barrel across the board.
This adjustment follows a surprising agreement among eight OPEC+ countries to accelerate their plans to ease oil output restrictions by increasing production by 411,000 barrels per day in May. This increase is three times greater than what was anticipated, accounting for approximately 0.4% of global oil supply.
The combination of this news and the ongoing global trade tensions has contributed to a nearly 11% drop in oil prices for the week ending April 4, pushing them to levels not seen in over three years. Analysts had previously expected a smaller price cut for Arab Light, estimating a decrease of $1.80 to $2 per barrel in response to significant declines in benchmark prices directly attributable to price movements in March.
The average spot premium for Dubai was recorded at $1.38 per barrel in March, down from $3.33 the previous month, indicating a broader trend linked to the return of more Russian supplies to Asian markets after disruptions earlier in the year.