Saudi Arabia may cut crude prices for Asia for December cargoes

Saudi Arabia may cut crude prices for Asia for December cargoes

SINGAPORE: Top oil exporter Saudi Arabia may cut the prices of most crude grades to Asia in December as weaker-than-expected fuel consumption in China amid its strict COVID-19 rules put a lid on regional demand, trade sources said. State oil giant Saudi Aramco may lower the official selling price for its flagship Arab Light crude by about 30 to 40 cents per barrel in December, according to five respondents surveyed by Reuters. The price cut comes as China, the world's largest crude oil buyer, extended stringent mobility controls to contain the highly transmissible Omicron variant after a surge in daily reported cases. Changes in the market structure for the Dubai Middle East oil benchmark typically guides how the Arab Light OSP is set. The premium of the first-month Dubai price over the third-month Dubai price narrowed by 59 cents during oil cargo trading in October versus the difference in September. That softening in the backwardation, or the structure when prompt prices are higher than for later delivery, suggests lower demand for oil. “Chinese demand is much weaker than expected,” said one respondent, adding that the market has already priced in the expectation that Chinese refineries will fully use their oil