By The Wall Street Journal
Saudi Arabia’s state-run oil giant said it would cut the price of its lighter crude grades to Asia in August, amid rising competition from rival producers in the Organization of the Petroleum Exporting Countries (OPEC).
The news comes as markets have questioned the efficiency of a decision by OPEC and its allies to cut production by a combined 1.8 million barrels to boost prices, which have fallen below $50 a barrel despite the effort.
Saudi Aramco, which pumps and markets oil for the world’s largest crude exporter, said it would reduce the charges to its super light crude by 90 cents a barrel and by 20 cents for its light crude. By contrast, it kept its prices for light crude unchanged in the US and increased them by 45 cents in the Mediterranean and by 55 cents in North West Europe.
Prices normally rise in the third quarter to reflect higher seasonal demand as refineries restart operations after first-half maintenance; the Middle East burns oil for air conditioning and American drivers hit the road. In addition, a decision by OPEC and key allies such as Russia to tighten the spigots last year should enable Saudi Arabia to charge more for each barrel it sells.