Saudi Arabia cuts May oil prices to Asia close to four-year low after OPEC+ supply boost

By Siyi Liu

SINGAPORE (Reuters) -Saudi Arabia, the world's top oil exporter, on Sunday slashed its prices for Asian buyers to close to their lowest level in four years, adding to speculation it is seeking to regain market share as part of OPEC+'s strategy to speed up oil output hikes.

State oil company Saudi Aramco cut the May official selling price (OSP) for flagship Arab Light crude by $2.30 to $1.20 a barrel above the average of Oman and Dubai prices, a pricing document from the producer showed.

The drop marks the biggest decline in more than two years and is the second consecutive month Aramco has lowered its prices, Reuters' record of Saudi OSPs showed. January's price of plus 90 cents was the lowest since early 2021 during the peak of the COVID-19 pandemic.

Eight OPEC+ countries in a surprise decision agreed on Thursday to advance their plan to phase out oil output cuts by increasing output by 411,000 barrels per day in May, triple the expected increase, representing around 0.4% of global supply.

Aramco's price cut, coming just days later, recalled past market share battles when OPEC producers competed to sell extra barrels, pushing prices lower.

"This could raise fears of the Kingdom reverting to the market share strategy of 2015 and 2016 when OPEC was unable to respond effectively to rising U.S. supply," said Callum Macpherson, head of commodities at Investec.

"However, it does not look that serious yet. This could also be in response to producers like Iraq and Kazakhstan who consistently produce above their quota," he said.

Saudi Arabia has been an aggressive supporter of production control to balance the market in the last five years since its budget requires oil prices of around $90 per barrel. Thursday's OPEC+ decision represents a major departure from those policies.

Aramco also lowered May prices for other grades it sells to Asia by $2.30 per barrel.

News of the OPEC+ production boost, together with an escalating global trade war, sent oil prices plunging nearly 11% in the week ending April 4, hitting more than three-year lows. [O/R]

Prior to the latest OPEC+ decision, analysts surveyed by Reuters had expected Arab Light for Asia to be cut by $1.80 to $2.00, tracking the steep declines in benchmark prices in March.

The spot premium of Dubai averaged $1.38 per barrel in March, down from $3.33 per barrel, the average in February. The drops were also due to more Russian supply returning to Asia, following disruptions in January and February caused by U.S. sanctions on Russian energy trade.

The tables below show the full free-on-board (FOB) prices for May in U.S. dollars.

Saudi term crude supplies to

Asia are priced as a

differential to the

Oman/Dubai average:

May APRIL CHANG

E

SUPER 1.75 4.05 -2.30

LIGHT

EXTRA 1.00 3.30 -2.30

LIGHT

LIGHT 1.20 3.50 -2.30

MEDIUM 0.65 2.95 -2.30

HEAVY -0.50 1.80 -2.30

Prices at Ras Tanura destined

for United States are set

against ASCI:

May APRIL CHANG

E

EXTRA 5.85 6.05 -0.20

LIGHT

LIGHT 3.60 3.80 -0.20

MEDIUM 3.70 3.90 -0.20

HEAVY 3.25 3.45 -0.20

Prices at Ras Tanura destined

for Northwest Europe are set

against ICE Brent:

May APRIL CHANG

E

EXTRA 4.15 4.65 -0.50

LIGHT

LIGHT 2.55 3.05 -0.50

MEDIUM 1.75 2.25 -0.50

HEAVY -0.65 -0.15 -0.50

Prices at Ras Tanura for

Saudi oil destined for the

Mediterranean are set against

ICE Brent:

May APRIL CHANG

E

EXTRA 4.05 4.55 -0.50

LIGHT

LIGHT 2.35 2.85 -0.50

MEDIUM 1.75 2.25 -0.50

HEAVY -0.95 -0.45 -0.50

(Reporting by Siyi Liu in Singapore and Ahmed Tolba in Cairo; Additional reporting and writing by Alex Lawler, Editing by Elaine Hardcastle, Sonali Paul and Joe Bavier)