(Bloomberg) -- Saudi Arabia cut pricing for most of its oil grades as the world’s biggest crude exporter is increasing production to assure buyers there is sufficient supply following U.S. President Donald Trump’s demands that OPEC do more to stabilize oil markets.
Oil extended losses after state-owned Saudi Arabian Oil Co. lowered August pricing for most crude grades in Asia and Europe and cut them all in the U.S. Frustrated by rising gasoline prices even after the Organization of Petroleum Exporting Countries agreed to raise output, Trump has called for more action.
“REDUCE PRICING NOW!,” Trump tweeted on Wednesday, accusing OPEC of “doing little to help” lower pump prices. He said Sunday that OPEC should put another 2 million barrels on the market to make up for the coming shortfall in Iranian crude sales due to sanctions. Iran’s OPEC governor, Hossein Kazempour Ardebili, had earlier on Thursday urged Trump to stop tweeting about oil, saying his missives were backfiring and driving prices higher.
OPEC and partners agreed on June 23 to increase oil production, with the Saudi and Russian energy ministers saying it would add about 1 million barrels a day to the market. Brent crude rose 5.2 percent in the first week after that agreement as production losses in Libya and Venezuela and the prospect of lower Iranian exports more than made up for promises of more Saudi crude. The global benchmark dropped 24 cents, or 0.3 percent, to $78 a barrel at 3 p.m. in London.
For Saudi Aramco August crude pricing list, click here.
The state oil company, known as Saudi Aramco, cut pricing for a key crude grade to Asia, its biggest market. Aramco set the premium for Arab Light crude for Asia at $1.90 a barrel above the Middle East benchmark, it said Thursday in an emailed price list. The 20-cent reduction was the first cut in four months from the highest since July 2014 and matched expectations of four traders in a Bloomberg survey.
Middle Eastern producers compete with cargoes from Latin America, North Africa, Russia and increasingly the U.S. for buyers in Asia. Companies in the Persian Gulf region sell mostly under long-term contracts to refiners. Most of the Gulf’s state oil producers price their crude at a premium or discount to a benchmark. For Asia, the benchmark is the average of Oman and Dubai oil grades.
By setting its official selling prices, or OSPs, either higher or lower from month to month, Aramco signals how strong or weak it views demand globally. Cutting prices can be seen as an indication that a country wants to supply more crude. The Saudi pricing is the first of the monthly releases by state oil companies in the region and most producers usually follow the country’s lead.
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