Middle East oil producers brace for painful times as ‘war’ prices kick in – Hellenic Shipping News Worldwide

  • Date: 06-Apr-2020
  • Source: Arab Times
  • Sector:Oil & Gas
  • Country:GCC
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Middle East oil producers brace for painful times as ‘war’ prices kick in – Hellenic Shipping News Worldwide

ICE Brent futures sank to the lowest since 2002 last month, but prices realized by the Middle East producers for key grades in March were lowest only since 2016, thanks in part to the whole-month average pricing mechanism used by most of the region's oil suppliers and the contract prices set prior to a full blown "price war" that started in early March.. Besides the sharpest global demand contraction caused by the coronavirus pandemic and a slump in crude oil, the steep price cuts announced by the Middle East producers became effective April 1.. The limited effectiveness of a production cut is now prompting some to wonder if Middle East producers could take a backhanded approach to supporting prices.. The price war, alongside demand destruction caused by the coronavirus pandemic, has pushed spot differentials for Middle East benchmarks to the lowest on record, starting a chain of events that many say now leaves producers little choice but to cut prices even further.. For now, based the market broadly expects Saudi Arabia to cut its OSP differentials for Asia by a further $2-$3/b for May, S&P Global Platts reported earlier this week..