Saudi Arabian oil giant Aramco has chosen to keep its December official selling prices (OSP) for the flagship Arab Light crude steady at $4 per barrel against the Oman/Dubai average for the Asian market. This decision breaks a five-month trend of price increases, with market expectations aligning with this stability due to weak processing margins and supply uncertainties. Conversely, Aramco has reduced its Arab Light OSP for Northwest Europe by $2.30 per barrel, setting it at $4.9 per barrel above ICE Brent. Additionally, the company has maintained its OSP for the US at $7.45, remaining unchanged from November.
The announcement comes alongside Saudi Arabia’s confirmation of its continued voluntary production cut of 1 million barrels per day in December, aiming to keep output around 9 million bpd. Russia has also extended its voluntary supply reduction of 300,000 bpd until the end of December, in addition to the cuts agreed upon in April. As a result of these decisions, oil prices rebounded on Monday after a recent drop in Brent and West Texas Intermediate futures, with ING analysts noting that the oil market is expected to be in surplus in the first quarter of the following year. This surplus might influence the Saudis and Russians to persist with their production cuts, although price gains may be limited by reduced crude oil throughputs at Chinese refineries.