Saudi Arabia has announced record discounts on its oil – Bloomberg
Saudi Arabia is sharply cutting oil prices in an effort to attract buyers in the Asia-Pacific region following the resumption of shipping through the Strait of Hormuz, where tens of millions of barrels of Middle Eastern crude had been stranded for several months.
The kingdom’s state-owned oil company, Saudi Aramco, will reduce the official selling price of its main export grade, Arab Light, for August by $11 per barrel. As a result, Saudi oil will trade at a discount of $1.50 to regional benchmarks next month—a first since the 2020 pandemic.
Such a massive drop in price will be the sharpest in at least the last 26 years. It will directly affect the markets of China and India—Russia’s key customers, which currently account for about 90% of the Kremlin’s total oil exports. The price decline comes amid a recovery in production among OPEC countries, which had previously fallen to its lowest level since 2000—16.13 million barrels per day—due to the war in Iran. Now, the largest producers in the Persian Gulf are bringing wells back online, and daily fuel exports through the strait have already reached 12 million barrels per day. Iran has also begun actively exporting its oil after reaching an agreement with the U.S. to lift sanctions, allowing it to trade in dollars.
The return of significant volumes of crude oil to the market is putting heavy pressure on global prices: the price of the North Sea benchmark Brent has fallen by 22% since early June and by 40% compared to late April, dropping to $71.97 per barrel. At the same time, the price of Russian Urals crude, which reached $115 in the spring, had plummeted to $40.4 per barrel as of July 2. This figure is $19 below the threshold set in the Russian Federation’s state budget, which had already posted a record deficit of 6 trillion rubles in the first five months of the year.
Bloomberg reports this.
Saudi Arabia has nearly restored its pre-war oil export volumes, according to Bloomberg.
More than 20 million barrels of Iranian oil are currently stranded on tankers in Asian waters due to difficulties in finding buyers.
Indian oil refineries have found themselves in an extremely advantageous position by agreeing to supply motor fuel to the aggressor country to help it overcome its domestic fuel crisis. At the same time, Russia is forced to significantly lower the prices of its crude oil for New Delhi.
