SAUDI Arabia lowered oil prices for buyers in Asia for December after members of the Opec+, which includes the Organization of the Petroleum Exporting Countries plus Russia and other allies, producers group said they will push back production increases by one month.
State-run producer Saudi Aramco will sell its flagship Arab Light crude grade at a premium of US$1.70 a barrel to the regional benchmark, according to a price list from the company, compared with US$2.20 this month. The company was expected to cut the premium by 45 US cents a barrel, according to a survey of traders and refiners.
Sluggish demand growth, particularly slack crude use in China, and concern that added supply will leave extra crude in the market have helped keep oil prices in check this year. So far markets have shrugged off concerns about the widening Middle East conflict as the heightened geopolitical tension has failed to interrupt physical crude supply. Global benchmark Brent crude traded around US$75 a barrel this week.
The Opec+ alliance – led by Saudi Arabia and Russia – has been curtailing output to prop up the market with group-wide cuts in production extending throughout next year.
Group members that made voluntary output cuts will not go ahead with a plan to begin rolling back reductions in December. This is the second delay to its plans to revive supply, as oil prices continue to struggle amid a fragile economic outlook.
Further delays in production increases may do little to bolster prices. Global markets still face a glut next year even if Opec+ refrains from increasing supplies, the International Energy Agency in Paris estimates. Citigroup and JPMorgan see prices slipping into the US$60s in 2025. BLOOMBERG
