Saudi Arabia significantly lowers selling prices for oil shipments in January – Commerzbank
Source Fxstreet
Saudi Arabia reduced its official selling prices (OSP) for customers in Asia to a four-year low in January, Commerzbank’s commodity analyst Barbara Lambrecht notes.
Saudi Arabia reduces official sail prices for oil shipments
“Next month, they will only have to pay a premium of 90 US cents per barrel for Arab Light compared to the Oman/Dubai benchmark. This is a significant drop compared to $1.70 in December and the lowest since January 2021. At the beginning of this year, the price premium was $3.5, at the middle of the year $2.9 and in November $2.2.”
“In our opinion, the significant price reduction is an indication of subdued demand in Asia, which purchases around 80% of Saudi Arabian oil. The OSPs for customers in Europe were also reduced significantly, which can be explained by the weak economy. In contrast, they remained unchanged for customers in the US as demand there is comparatively robust.”
“The weakness in demand in Asia is likely to have been a key reason why OPEC+ last week postponed the increase in oil production planned for January by a further three months until April. Saudi Arabia's price cut therefore comes as no great surprise. If there is no revival in demand, the most recent postponement of the production increase by OPEC+ is unlikely to be the last.”
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