JAKARTA - Saudi Arabia, the world's top crude oil exporter, said it would cut the price of its flagship Arab Light crude oil in February for Asian customers to the lowest level in 27 months. 

This was due to competition from other suppliers and concerns about oversupply on Sunday, (7/1/2024). Saudi Aramco (2223.SE) cut its February official selling price (OSP) of Arab Light to Asia by US$2 per barrel from January to US$1.50 per barrel above the Oman/Dubai price, a level last seen in November 2021. 

The price cut, the largest in 13 months, was in line with market expectations, as refiners sought competitive prices from Saudi Arabia compared to crude supplies from other Middle East producers and arbitrage cargoes from the Atlantic Basin.

"Saudi crude is still relatively more expensive compared to other regional crudes. But we are quite happy to see such prices, making it much more affordable for us," said a refinery trader in North Asia on Monday, (8/1/2024) quoted from Reuters.

The Asian physical oil market weakened over the past month, reflecting expectations of reduced supply in the near term and weakening demand as several refineries in Asia are scheduled to shut down for spring maintenance in the northern hemisphere. 

Despite a voluntary production cut of 2.2 million barrels per day by the OPEC+ group of oil producers, market participants are not convinced that the supply reduction will be enough to stop the buildup of global oil inventories and trigger a rise in oil prices until at least the second quarter of 2024.

Saudi Aramco also cut the price of other crude oil it sells to Asia by US$2 per barrel in February compared to previous months, according to the statement.