Saudi Arabia has significantly reduced the official selling prices of its oil ahead of a planned production increase next month. The most substantial price cut is for oil sold in Asia, with the price of its flagship Arab Light blend set to drop by $2.30 per barrel in May. This price will remain $1.20 per barrel higher than the Dubai/Oman benchmark.
This marks the largest price reduction in over two years, according to Reuters. The price cut comes as global oil prices have fallen, partly due to President Trump’s announcement of new tariffs on all trade partners, including China, the world’s largest oil importer. China quickly responded by imposing its own tariffs on U.S. goods, including oil and gas, further pressuring prices.
OPEC+ also played a key role in driving down prices. Just a day after the tariff announcement, the group shocked markets by revealing plans to increase production by three times the previously scheduled amount of 135,000 barrels per day (bpd) in May. Instead, production will rise by 411,000 bpd, citing strong market fundamentals and a positive outlook.
These factors led to a significant drop in international oil prices, reaching their lowest point since the pandemic. Given the circumstances, Saudi Arabia’s decision to cut prices was expected. The reduction exceeded the $1.80 per barrel cut that analysts surveyed by Reuters had anticipated.
However, the price cuts for other regions were smaller. For exports to Europe, the price cut is around $0.50 per barrel, while exports to the United States saw a decrease of $0.20 per barrel. This marks the second consecutive month that Saudi Arabia has lowered its official selling prices for crude oil.
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