Saudi Arabia cuts oil prices for Asia buyers as OPEC adds supply

Saudi Arabia cut oil prices for buyers in Asia, signaling that extra supplies from OPEC and its partners could loosen the market amid the rapid spread of coronavirus.

Saudi Aramco, the world’s biggest oil company, reduced February’s prices for all crude grades that will be shipped to Asia, its main market. It lowered the key Arab Light grade by $1.10 from January to $2.20 a barrel above the benchmark it uses.

The move was smaller than expected. Traders in Asia were forecasting a $1.25 cut for the grade, according to a Bloomberg survey last week.

On Tuesday OPEC+, led by Saudi Arabia and Russia, decided to increase production in February by 400,000 barrels a day, even as it predicted the market would switch to being oversupplied from this month.

Brent crude is trading above $80 a barrel as markets largely shrug off concern that omicron will lead to widespread shutdowns and stringent travel restrictions. While traders’ worst fears have been avoided so far, OPEC+ remains cautious and has left itself the option to pause output increases if demand slumps or excessive amounts of oil end up in storage.

Crude rose more than 50 per cent last year as demand recovered from the pandemic, tightening the market as OPEC+ kept output far below capacity.

Saudi Arabia sends more than 60 per cent of its crude exports to Asia, with China, Japan, South Korea and India being the biggest buyers.