Saudi Arabia has reduced its oil prices for Asia to almost a four-year low as the organization of the petroleum exporting countries (OPEC) surprisingly increased output levels; all sending signals that the Kingdom is potentially pivoting away from maintaining price stability in oil markets toward gaining market share. This price cut could mark the beginning of a potentially fierce fight for market share in the oil markets.
In a dramatic turn of events impacting markets across the world, Saudi Arabia has cut its oil prices significantly for East Asia, bringing prices close to pandemic-period lows in the United States. The price cut was announced on Sunday, April 10th, by Saudi Aramco, the state-controlled oil company and largest oil producer in the world, suggesting a possible shift in strategy away from price stability after OPEC had announced an increase in oil output levels just days earlier.
The May official selling price (OSP) for Arab Light crude, Saudi Arabia's key grade for crude oil, was reduced by $2.30, to $1.20 above the average of the Oman and Dubai markers. This marks the largest price cut in two years and moves prices to levels not seen since January 2021, while the world grapples with the COVID-19 pandemic. For East Asia, the signal is unequivocal: the Kingdom is prepared to sacrifice price stability in the short term to compete for market share.