Saudi Arabia lowers July oil prices for Asia

• July Arab Light falls by 20 cents
• Price cut smaller than expected
• Higher demand may limit export, analyst says

Saudi Arabia, the world’s biggest oil exporter, on Wednesday lowered its July prices for Asian buyers after Opec+ hiked output for a fourth month. However, the price cut was smaller than expected.

Saudi Aramco, the country’s state oil company, cut the official selling price for the flagship Arab light crude it sells to Asia for July to $1.20 a barrel above the Oman/Dubai average, 20 cents lower than June and the lowest since May.

The Organization of the Petroleum Exporting Countries and allies such as Russia are raising output. Eight Opec+ countries on Saturday agreed to another big increase of 411,000 bpd for July, having increased output by the same amount in May and June.

However, Saudi Arabia’s 20 cent price cut was smaller than the 40 cent to 50 cent reduction expected in a Reuters survey.

“A smaller reduction was likely due to strong domestic crude burn in Saudi Arabia and refinery runs that could limit barrels available for export,” said Richard Jones, an analyst at consultancy Energy Aspects.

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The Middle East typically burns crude and high-sulphur fuel oil for power between June and August, the peak demand season. Analysts expected Saudi Arabia to burn more crude oil for power generation this summer.

Saudi crude official selling prices set the trend for other grades exported by Iran, Kuwait and Iraq, affecting about 9 million barrels per day of crude bound for Asia.