Saudi Aramco is lowering prices for the first time in four months. The state-controlled company dropped its key Arab Light crude grade for next month’s shipments to Asia to $4.40 a barrel above the benchmark it uses, from $9.35 in May.
Aramco also lowered all grades for the north west Europe region and almost all for the Mediterranean. Prices for US customers were kept unchanged from May, Bloomberg reported.
Saudi Arabia’s decision to cut oil prices for buyers in Asia comes as Covid lockdowns in China weigh on demand, countering uncertainty around Russia’s supplies as the Ukraine war drags on.
Aramco’s decision comes days after OPEC+, led by Saudi Arabia and Russia, agreed to continue increasing crude output only gradually, adding 432,000 barrels a day to the market in June. The 23-nation group has struggled to meet even that modest target.
Previously, Saudi Arabia, the world’s biggest oil exporter, raised its prices to record levels in the past two months after crude futures surged above $100 a barrel when Russia invaded Ukraine.
Russian flows have already fallen and may drop further as the European Union moves closer to formally sanctioning energy supplies from the country.
While the war has tightened the global oil market, Beijing’s Covid Zero strategy has lead to China’s largest demand shock since the early days of the pandemic, Bloomberg reported.
Consumption of gasoline, diesel and aviation fuel last month was expected to slide 20 percent from a year earlier.
China’s Strategy
Chinese Premier Li Keqiang warned in a statement on Saturday of a “complicated and grave” employment situation as the government tries to contain Covid.
China’s leaders doubled down on their strategy last week, warning against any attempts to question the approach even as economic activity contracts amid factory closings and supply-chain disruptions, Bloomberg reported.
Still, the biggest independent oil trader said on Sunday that China’s measures were working as far as stopping the spread of the virus is concerned.
Follow us on
