Saudi Arabia Cuts Oil Prices

Saudi Arabia’s state-run oil company has cut its October pricing for its Arab Light crude oil for Asian buyers, according to a fresh price list released on Friday.

Saudi Aramco has cut its Arab Light crude oil by 70 cents, the price list showed.

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

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

The price reduction to Asia—Saudi Aramco’s prime market—does not bode well for the oil company’s outlook on Asian demand, with Official Selling Prices for Asia now at their lowest levels in three years, with weak manufacturing activity in China likely the culprit.

Nevertheless, China’s crude oil imports did rebound in August as refiners increased their runs to meet seasonal demand.

Saudi Aramco’s move follows Bank of America’s new price forecasts for next year, which have been downgraded to $75 per barrel for Brent, down from $80. The bank lowered its price forecast for WTI to $71 per barrel from $75.

This weak Asian demand is also likely behind the OPEC+ decision earlier this week to delay its production quota rollbacks that were scheduled to take place in October. A new agreement from OPEC+--likely hard fought with Saudi Arabia spearheading the delay—will see two more months of holding the current production quota levels steady.

Citigroup had warned that Brent could fall below $70 per barrel had OPEC+ followed through with its plans to add production back to the oil market, although the two-month delay hasn’t seemed to have done much better.

By Julianne Geiger for Oilprice.com

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