Saudi Arabia cuts oil prices

Saudi Arabia’s state oil company cut the October price of its Arab Light crude to Asian buyers, according to a new price list published on Friday.

Saudi Aramco cut its Arab Light crude by 70 cents, the price list shows.

The news comes as Brent crude prices fell further, trading at $71.49 a barrel, down $1.20 a barrel (-1.65%) on the day and the lowest level in the last years.

Saudi Aramco also cut the price of Arab Light to Europe and the United States.

The price cut in Asia — Saudi Aramco’s main market — does not bode well for the oil company’s outlook for Asian demand, with official selling prices for Asia now at their lowest levels in three years, with weak production activity likely to blame from China.

However, China’s crude imports rebounded in August as refiners increased runs to meet seasonal demand.

Saudi Aramco’s move follows Bank of America’s new price forecasts for next year, which were downgraded to $75 a barrel for Brent, down from $80. The bank cut its price estimate for WTI to $71 a barrel from $75.

That weak Asian demand is also likely behind OPEC+’s decision earlier this week to delay output cutbacks that were scheduled to take place in October. A new deal from OPEC+ – likely hard-fought with Saudi Arabia leading the delay – will see two more months of keeping current levels of production quotas constant.

Citigroup warned that Brent could fall below $70 a barrel if OPEC+ followed through on plans to add production back to the oil market, although the two-month delay does not appear to have done much better.

By Julianne Geiger for Oilprice.com

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