In a recent turbidity of global oil market challenges, it has emerged that Saudi Aramco plans to cut back on the official selling prices (OSPs) for crude oil sales to Asia for the month of December. The price of Arab Light crude has been trimmed by 50 cents per barrel as the OSP has been pegged at $1.70 above the intra-regional average. A similar price cut of 50 cents per barrel was made for the Arab Extra Light and the Super light grades while the OSPs for the Arab Medium and Heavy grades reduced by a lesser extent of 40 cents per barrel.
As for the North American region, the December OSP for Arab Light crude oil was quoted at $3.80/bbl. above the Argus Sour Crude index, whereas the price differential for the Arab Light grade in Western Europe was pegged at $0.15 above the ICE Brent price.
Every oil region is blessed with unique crude oil reserves, which in the case of Aramco and Saudi Arabia in general are five in number. These include super light crude oil (density greater than 40) and Arab heavy crude oil, which has a density of less than 29. These price adjustment measures come as the global oil market has been under pressure to decline and which it weakens because of the value of the US dollar. Oil prices tumbled 2.5% on Wednesday, putting an end to a five-day gaining streak. The price turn was reported in connection with the dollar strengthening and political events in the US, focusing on former president Donald Trump’s re-election ambitions. A dollar exchange rate increases above the norm cuts oil purchasing power for non-dollar buying clients.
The pricing fall comes at back of high low pricing over an extended period attributed to a multitude of diverse factors such as OPEC plus cut production, increasing Middle East tensions and waiting for Fed policies. A rise in economic indicators from China, the largest crude oil importer in the world, has also fueled the uncertainty within the oil global markets. The most recent statistics revealed that the price of Brent crude oil futures reached $73.64 per barrel, while West Texas Intermediate quoted $70.22.
