Saudi Arabia lowers oil pricing to US before Opec meeting

The Opec headquarters building in Vienna. The group is expected to stay the course and roll over existing output policies. AFP

Saudi Arabian Oil Co lowered its official selling price for all crude grades to the US, the company said in an e-mailed statement on Wednesday. In Asia, the discount for its Arab Light against a regional benchmark will be $1.40 a barrel, compared with $1.30 in December. It was expected to be widened by 25 cents, according to the median estimate in a Bloomberg survey of eight refiners and traders.
"They are offering their crude oil at a lower price to the two most important markets, the US and Asia, two days before the Opec meeting," a clear sign the Saudis aren't going to pull back output, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc in New York.
Brent crude, a global benchmark, has slumped about 40 per cent in the past year as Saudi Arabia, Russia and the US boosted output.
Opec decided in November last year and again in June to keep its production target unchanged, after exceeding its target of 30 million barrels a day in each month since June 2014.
Saudi Arabia Oil Minister Ali Al Naimi is in Vienna with other oil ministers as Opec plans to review the target on Friday.
Saudi Arabia boosted output to a record 10.48 million barrels a day in June, according to the International Energy Agency, and pumped 10.33 million barrels daily last month, data compiled by Bloomberg show.
Middle Eastern producers are competing increasingly with cargoes from Latin America, North Africa and Russia for buyers in Asia. Producers in the Arabian Gulf region sell mostly under long-term contracts to refiners. Most of the Gulf's state oil companies price their crude at a premium or discount to a benchmark. The benchmark for Asia is the average of Oman and Dubai oil grades.
Brent for January settlement dropped $1.70, or 3.8 percent, to $42.74 a barrel on the London-based ICE Futures Europe exchange. at 1:53pm in New York. The European crude is approaching the six-year low of $42.23 touched in August.