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Saudi Arabia trims oil prices to Asia as booming US exports add competition

Oil refinery
(Photo by Janos Kummer/Getty Images)
  • Saudi Arabia is cutting prices on its flagship Arab Light crude headed to Asia, Bloomberg reported.

  • That's as US crude production and exports surge, weakening demand for Saudi oil and stiffening competition.

  • Meanwhile, Riyadh has struggled to prop up global crude prices with continued production curbs.

Saudi Arabia is feeling the burn of the US oil boom, cutting oil prices to Asia to stimulate demand.

State-owned Saudi Aramco lowered the price of its flagship Arab Light crude headed to Asia in January by 50 cents to $3.50 a barrel, according to Bloomberg. It's the first time it has made such a cut since June.

The decision is a nod towards the weakening demand the world's top oil exporter is facing as other players like the US douse the oil market with more supply. In particular, prices for sweet or low-sulfur crude have been falling in recent weeks, owing in part to robust US exports, Bloomberg reported.

That's as US crude oil production has been booming. It hit a record 13.2 million barrels a day in September, according to the Energy Information Administration.

And even beyond the US, non-OPEC+ production in countries like Brazil have been ramping up as Saudi Arabia and Russia have been slashing supply.

That influx of oil from nations outside the cartel have weighed down crude prices, increasing competition against Saudi crude.

On Wednesday, Brent crude fell 3% to below $75 a barrel and has tumbled more than 20% from a September high.

Despite struggling to prop up prices, Saudi officials remain unflinching on sticking to output cuts. On Monday, Riyadh's energy minister said on Bloomberg TV that the cuts could "absolutely" continue past the first quarter of next year. That's after OPEC+ announced last week that they plan to reduce supply by more than 2 million barrels a day next year.

Meanwhile, energy expert Paul Sankey thinks the kingdom will launch a "market share war" against the US by pivoting production increases next year.

Read the original article on Business Insider

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