Saudi Arabia cuts oil prices for Asia as virus hits India demand

Saudi Arabia lowered prices for oil shipments to customers in its main market of Asia as a surge in coronavirus cases crimps energy demand in India, the world’s third-largest crude importer.

The kingdom’s state energy firm, Saudi Aramco, reduced pricing for June shipments to the continent by between 10 and 30 cents per barrel.

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The key Arab Light grade for Asia was cut to $1.70 a barrel above the benchmark from $1.80 for May shipments. That’s the first reduction in official selling prices for the grade since December, signaling potential weakness in Asian oil markets.

Aramco had been expected to lower Arab Light’s premium by 20 cents, according to a Bloomberg survey of seven traders and refiners.

Saudi Energy Minister Prince Abdulaziz bin Salman has urged fellow members of OPEC+ to be cautious as the group eases supply cuts started last year when the pandemic was hammering energy markets. The 23-nation cartel plans to increase daily output by just over 2 million barrels through to July, beginning with 600,000 this month. That would still leave production roughly 5 million barrels a day below pre-pandemic levels.

Brent crude has climbed almost 35% this year to around $69 a barrel as vaccination rollouts enable the U.S., Europe and some other major economies to reopen. Aramco’s chief executive officer, Amin Nasser, said on Tuesday he’s more optimistic about the outlook for oil.

Still, the pandemic has rapidly worsened in India since the start of April. The country’s now reporting around 400,000 cases every day.

Aramco sets its pricing for Europe and North America separately. Its OSPs are seen as a bellwether for oil markets.