Saudi to cut Jan crude prices to Asia after OPEC deal
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Saudi to cut Jan crude prices to Asia after OPEC deal

Saudi to cut Jan crude prices to Asia after OPEC deal

OPEC and Russia said they will cut output by 1.5 million barrels per day

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Top oil exporter Saudi Arabia is expected to cut the January price of flagship Arab Light crude for Asia to the lowest in at least two months to track weakness in Middle East oil benchmark Dubai, trade sources said on Thursday.

The official selling price (OSP) for Arab Light crude could fall between 90 cents and $1.20 a barrel in January from the
previous month, a Reuters survey of four refiners showed.

The Dubai contango spreads in the first and third month widened more than $1 in November although refining margins are
at their highest in nearly a year.

The price announcement, due this weekend, will come on the heels of a deal on Wednesday in which the Organization of the
Petroleum Exporting Countries (OPEC) and Russia said they will cut output by 1.5 million barrels per day (bpd).

Read: OPEC agrees to first oil output cut since 2008, Saudis take ‘big hit’

“(The deal) should be bullish but it is really up to the Saudis how to view it,” a Singapore-based trader said. “Dubai is
already not much lower than Brent so the Saudis might want to stay competitive, too.”

Smaller price cuts are expected for heavier grades such as Arab Medium and Arab Heavy on robust demand in Asia, boosted by
the strongest fuel oil margins in five years.

Arab Extra Light crude’s OSP is expected to drop more than $1 after a rise in arbitrage supplies crimped demand for light
sour crude in Asia, the survey respondents said.

Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi
prices, affecting more than 12 million bpd of Asia-bound oil.

State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change
in the value of its oil over the past month, based on yields and product prices.

Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.


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