SINGAPORE- Top oil exporter Saudi Arabia unexpectedly kept March price of its flagship Arab Light crude to Asia unchanged at a more than two-year low, an Aramco statement showed on Tuesday, as the OPEC leader strives to maintain its market share.
Saudi Aramco set the official selling price (OSP) for March-loading Arab Light to Asia at $1.50 a barrel over the Oman/Dubai average, same level as the previous month.
The state oil giant made its biggest cut on the OSP in 13 months for February cargoes to a 27-month low amid competition from rival suppliers.
The March price was lower than the market expectations that forecasted Saudi to raise the OSP by about 55 cents following the improved market structure and supply disruption concerns amid escalating Middle East conflicts.
“(The stable price) is most likely came as Saudi Arabia is keen to secure its market share,” a trading analyst with a North Asian refiner said.
“Saudi’s crude allocations to China have dropped heavily in recent months.”
Chinese refiners asked for low supplies for January- and February-loading Saudi crude due to high prices.
While also keeping March Arab Heavy crude price unchanged, Saudi Aramco marginally cut Arab Extra Light and Arab Medium prices to Asia, according to the statement.
For other regions, Saudi Aramco did not adjust its March OSPs to northwest Europe, but lowered Arab Light price to the United States by $0.30 a barrel.
Saudi Arabia’s surprise reversal of its oil expansion ambitions was at least six months in the making, said an industry source, after Riyadh concluded its vast spare capacity was enough to supply markets during crises and further investments in new fields would make no economic sense.
State oil giant Aramco was ordered by the Saudi energy ministry last week to halt plans to boost its maximum sustainable capacity to 13 million barrels per day (bpd), returning to the previous 12 million bpd target.
The kingdom is the world’s largest oil exporter and is pumping around 9 million bpd, well below capacity after several output cuts coordinated with the de facto Saudi-led Organization of the Petroleum Exporting Countries (OPEC) and its allies.
With around 3 million bpd of capacity to spare, an assessment was made that much of that was not being monetized, the industry source said.
“I think price management is the priority for 2024 and 2025,” said a second person familiar with the matter.
“This is a deferral and will likely resume at a later date,” the person said. “This has no bearing on the view of long-term demand.”
The decision came from the top, both sources said.
