Saudi Arabia has lowered the official selling price of its flagship Arab Light crude for Asian buyers for June; however, it remains near record levels amid supply disruptions caused by the war in the region. This was reported by Bloomberg, according to UNN.
Details
According to the price list, state-owned company Saudi Aramco reduced the price of Arab Light by $4 per barrel – to a premium of $15.50 relative to regional benchmarks.
Market expectations were significantly lower – a Bloomberg survey of traders and refineries predicted a decrease of $8 per barrel. Despite the correction, the new price level remains the second highest in history.
War and the Strait of Hormuz restrict supplies to global markets
The main reason for the high prices remains the war in the Middle East, which has significantly restricted oil exports through the Strait of Hormuz. Saudi Arabia is partially bypassing this risk by using a pipeline to the port of Yanbu on the Red Sea, allowing shipments to continue.
At the same time, traders note that the actual price for buyers may be higher due to additional transportation costs.
Global oil prices surged amid the conflict
Since the conflict began in late February, the price of Brent crude has risen by more than 50% and recently reached a four-year high. Additional pressure on the market is created by uncertainty surrounding the Strait of Hormuz and the standoff between the US and Iran.
Against this backdrop, seven OPEC+ countries led by Saudi Arabia and Russia agreed to only a symbolic increase in production quotas.
The actual increase will depend on the stabilization of the situation and the restoration of logistics in the region.
The United Arab Emirates, which also has alternative export routes, recently withdrew from OPEC, seeking to avoid production restrictions.