Saudi Arabia defies expectations and keeps oil prices steady

The Saudi Aramco logo is pictured at the oil facility in Abqaiq, Saudi Arabia.

Saudi Arabia kept oil prices for its main market of Asia largely steady and lowered those for Europe, going against expectations it would hike them and pile more pressure on consumers a day after Opec+ opted to slash production. State-controlled Saudi Aramco left its key Arab Light grade for November shipments to Asia unchanged from this month at $5.85 a barrel above the regional benchmark. Refiners and traders predicted a raise of 40 cents, according to a Bloomberg survey from last week. “It is a surprise,” said Tamas Varga, an analyst in London at brokerage PVM Oil Associates. A steep increase would have further tightened the crude market following Opec+’s move on Wednesday to lower its output target from next month by 2mn barrels a day. The White House said it was “shortsighted” at a time many countries are “reeling from elevated energy prices.” Crude prices have dropped since June after jumping in the wake of Russia’s invasion of Ukraine. But at around $90 a barrel, they are still up almost 20% this year, contributing to a painful surge in inflation globally. Aramco increased its medium and heavy grades for Asia by 25 cents a barrel month-on-month and dropped extra light by 10 cents. All official selling prices for North West Europe and the Mediterranean region were lowered. Grades for the US, a relatively small market for Aramco, were lifted by 20 cents. The firm’s decision may be aimed at countering Russia’s efforts to tap Asia more aggressively, according to Giovanni Staunovo, a strategist at UBS Group AG. The European Union is set to ban all seaborne imports of crude from Russia in early December, forcing Moscow to turn to China and India for more of its sales. Aramco is “aiming to keep its market share” in Asia, Staunovo said. Moreover, the European ban “is an important driver of the OSP cut for Europe. With member states of the EU looking for alternatives, it is important to be competitive versus, for example, US crude.”