Saudi Aramco has reduced the official selling prices for all regions in Asia for June. The company's main Arab light crude oil price is down to $2.55 per barrel above the regional benchmark, 25 cents lower than this month's price, and smaller than the market's expected 45 cent drop. As the energy market weakens, Saudi Arabia has lowered oil prices for Asia.
After a sharp drop in crude oil futures, traders worry about the health of the global economy, prompting Saudi Arabia to reduce oil prices for major markets in Asia.
The sharp drop in international oil prices has led to a decline in refining profit margins. Saudi Arabia's state-owned Saudi Aramco has lowered the official selling prices for all regions in Asia for June. The company's main Arab light crude oil price is down to $2.55 per barrel above the regional benchmark, 25 cents lower than this month's price, and smaller than the market's expected 45 cent drop.
OPEC+, including Saudi Arabia, decided earlier last month to cut production by 1 million barrels per day, calling it a "preventative measure" to stabilize the market. Brent crude oil futures subsequently jumped to over $87 per barrel, but prices have since returned to $72, indicating that the market remains dominated by pessimism.
About 60% of Aramco's crude oil is sold to Asia, mostly under long-term contracts, and the company reviews its pricing every month. Its price adjustments often influence crude oil pricing in countries like Iraq and Kuwait.
Demand for U.S. gasoline and jet fuel is showing signs of fatigue; there's no sign of relief from the regional banking crisis; and investors are worried about the spread of the banking crisis. At the same time, the risk of large-scale U.S. debt defaults is increasingly urgent. The Fed announced a 25 basis point rate hike on May 3 as expected, fueling investor concerns that the global economy is heading toward recession. As of Wednesday, oil prices have fallen for three consecutive days, with U.S. WTI falling 14% this year, and CTA short selling driving oil prices to their worst oversold levels in two years.
On Wednesday, May 3, WTI crude oil futures for June fell $3.06, or 4.27%, to $68.60 per barrel; Brent futures for July fell $2.99, or 3.97%, to $72.33 per barrel.
Morgan Stanley has lowered its Brent crude oil price forecast to $75 per barrel by the end of the year.
In the latest edition of the "Domestic and Foreign Oil and Gas Industry Development Report" released by the CNPC Economic Research Institute in March, it is predicted that under the baseline scenario, international oil prices will fall year-on-year in 2023 but still remain high, with the annual Brent average price at $80-90 per barrel; in a pessimistic scenario, Brent oil prices may fall below $50 per barrel.
