Saudi Arabia cuts oil prices for US and Asia

The discounted price was for its Arab Light grade – Saudi Arabia’s official price for light crude oil, and was $2 a barrel down to the Oman and Dubai average.

Normally, light crude oil receives a higher price than heavy crude oil on commodity markets because it produces a higher percentage of gasoline and diesel fuel when converted into products by an oil refinery.

The Arab Light OSP to the United States was set at a premium price of $0.90 a barrel to the Argus Sour Crude Index (ASCI) for January, down 70 cents from the previous month.

Arab Light OSPs to Northwest Europe were raised by 20 cents for January from the previous month to a discount of $3.15 a barrel to the Brent Weighted Average (BWAVE).

The discounts on Saudi crude oil for Asian customers in January were the biggest since at least 2002, according to Reuters’ data, while prices for the US were cut for the fifth month in a row.

Some analysts have said sharp drops in official selling prices in recent months show the Kingdom is fighting for market share with other producers, but others have suggested the prices only reflect the market and are a backward-looking rather than a forward-looking indicator.

“(The) Saudis are making it clear they don’t want to lose market share,” Richard Mallinson, an analyst at consultancy Energy Aspects, told the Reuters Global Oil Forum.

Saudi Arabia and other rich Gulf producers last week blocked proposals from other OPEC members, such as Venezuela and Algeria, to cut output in order to support oil prices.

OPEC sources have said Saudi Oil Minister Ali al-Naimi told the OPEC ministerial meeting behind closed doors that OPEC should defend its market share as production cuts would only boost rival producers such as US shale oil companies, Reuters has reported.

Oil prices have been volatile since the OPEC meeting and are down around 40% since June. On Thursday, Brent crude, the official oil price benchmark, traded below $70 per barrel.