Saudi Arabia Drastically Cuts Oil Prices
Saudi Arabia has announced the largest reduction in official export oil prices in the last 26 years. The state company Saudi Aramco will reduce the price of its main export grade Arab Light for August deliveries by $11 per barrel, reports The Moscow Times.
Oil storage tanks at the 'North Jeddah' oil distribution station, an Aramco oil facility in Saudi Jeddah. Illustrative photo. Photo: AP Photo/Amr Nabil, File
For the first time since 2020, Saudi oil will be sold at a discount of $1.5 relative to regional benchmark prices. The goal of this move is to make supplies more attractive to buyers in Asia after the resumption of shipping through the Strait of Hormuz.
The price reduction will affect the largest oil importers — China and India, which also remain the main buyers of Russian oil.
After the opening of the Strait of Hormuz, Persian Gulf countries began to increase production. Up to 12 million barrels of oil are transported daily through the strait, which has increased supply on the global market and intensified pressure on prices.
Against this backdrop, the price of Brent oil has fallen by approximately 22% since early June, and Russian Urals oil had dropped to about $40 per barrel by early July. Analysts note that increased production by OPEC+ countries amid weak global demand could lead to an oil surplus on the market and further price reductions.