According to Reuters, on January 7, local time, Saudi Aramco lowered some petroleum products**.
Saudi Aramco's flagship Arabian Light** was sold for $2 lower in Asia in February, 1 per barrel above the benchmark price$5, the lowest since November 2021**. Previously, the merchants surveyed estimated that the price would be reduced by 1 per barrel$25.
In addition, Aramco downgraded its February deliveries to Northwest Europe, the Mediterranean and North America**. Saudi Aramco** is priced as a benchmark for Middle Eastern oil producers. Traditionally, other major oil producers in the Middle East, such as Kuwait and Iraq, usually follow Saudi Aramco's pricing as well.
In addition to the impact of supply and demand, this price reduction is also a normal seasonal adjustment. Oil consumption typically slows in February and March, and refineries use this time to shut down some facilities for scheduled maintenance.
According to the report, Saudi Arabia's larger-than-expected downward revision of key sales to Asia has strengthened the market's perception of the weakness of the spot market in the largest consumer region. Traders are now expecting a slowdown in demand growth. Refiners and traders said Saudi Arabia's pricing has been lowered in tandem with the spot market, which could boost margins for refiners who use Saudi Arabia as a refining feedstock. However, at least three Asian buyers said that oil prices** are unlikely to lead Saudi Arabia to request more deliveries, as there are still cheaper and competitive ones in the spot market***
In 2023, there was the first annual year since 2020 due to the expansion of production by non-OPEC producers. The decline prompted Saudi Arabia to voluntarily cut production sharply, and other OPEC+ members also took corresponding measures.
On November 30, 2023, the OPEC Secretariat issued a statement saying that a number of OPEC and non-OPEC oil producers will continue to voluntarily cut production in the first quarter of this year, with a total of 2.2 million barrels per day. On the same day, OPEC+ held its 36th ministerial meeting in the first mode. The statement released in the evening said that the production cut will be based on the 2024 production target set by the 35th ministerial meeting of "OPEC+" in June 2023, and is an additional production cut after the major oil producers announced voluntary production cuts in April 2023.
According to the statement, Saudi Arabia will extend the voluntary production cuts of 1 million barrels per day starting in July 2023 until the end of March this year. In the first quarter of this year, Russia raised the voluntary production cut of 300,000 barrels per day that began in September 2023 to 500,000 barrels per day. OPEC+ members such as Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman also voluntarily cut production in the first quarter of this year.
*: Economic Information Daily.