(Bloomberg) -- Saudi Arabia cut most oil pricing for its Asia buyers as a resurgence in the coronavirus clouds the outlook for energy demand.
State oil producer Saudi Aramco (SE:2222) decreased pricing for December shipments of Arab Light crude for Asia, its largest regional market, by 10 cents a barrel to a 50-cent discount to the benchmark. Aramco had been expected to make only slight changes in monthly pricing for the grade, according to a Bloomberg survey of traders and refiners in late September.
Aramco cut all December crude pricing to the U.S. and raised all prices for the month to northwest Europe and the Mediterranean region.
Oil demand continues to face “headwinds,” OPEC Secretary-General Mohammad Barkindo said earlier this week. The Organization of Petroleum Exporting Countries, led by Saudi Arabia, agreed with Russia and other producers in April to pump less crude to try to prop up the market.
The supply cuts have helped oil rally since the OPEC+ coalition agreed on quotas, but benchmark Brent crude is still down about 38% this year. Brent is likely to continue ranging between $38 and $43 a barrel, according to Ibrahim Al-Buainain, chief executive officer of Aramco’s trading unit.
OPEC+ is now considering keeping production cuts at current levels into 2021 instead of tapering them in January as planned. With European countries imposing fresh lockdowns and refinery profits dwindling, even Al-Buainain has expressed doubt that the market needs more crude.
The producer group will meet on Nov. 30-Dec. 1 to review its output policy.
Profits from processing crude into refined fuels have tumbled amid virus-induced lockdowns and travel bans. Aramco on Tuesday reported a third-quarter loss before interest and taxes in its downstream business, which includes refining, compared with a profit a year ago.
Saudi Arabia’s pricing decision usually sets the tone for other Middle Eastern suppliers, including Iraq and the United Arab Emirates, the second- and third-largest producers in OPEC.
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