Recession Gloom Hangs Over Oil Market, Saudi Arabia Cuts Official Price of Crude Oil Sold to Asia

The prices of international crude oil futures have fallen sharply in recent days as investors are concerned about the global economy. Against this backdrop, Saudi Arabia, the world's largest oil exporter, recently lowered the prices of crude oil sold to its main market in Asia in June.
Recent factors such as the weakening US economy and the ongoing banking crisis have triggered renewed falls in Brent Crude and WTI crude futures.
On Thursday, Saudi Aramco, the Saudi Arabia state oil company, cut its flagship crude oil prices for Asian buyers for the first time in four months. The company reduced the prices of June Arabian Light crude to a $2.55 per barrel premium to the regional benchmark, 25 cents lower than the May selling price.
However, this reduction was less than the 45 cents expected by the market. This suggests that Saudi Arabia is struggling to support oil prices following OPEC+'s surprise announcement last month of further production cuts starting in May.
Processing margins at Asian refineries were subdued due to high oil prices and an oversupply of refined oil products. A smaller cut in official selling prices may prompt some refineries to cut crude oil purchases or even reduce operating capacity this month.
Saudi Arabia also lowered the selling price of other grades of crude oil for Asia in June, by more than the Arabian Light crude. Compared to the previous month, Arab medium and  Heavy crudes sold for 80 cents and 90 cents less respectively.
Saudi Arabia provides the pricing reference for most Middle Eastern oil exporters, usually announcing prices for the following month around the fifth day of each month. Saudi Aramco exports about 60% of its crude oil to Asia, with China, Japan, South Korea and India being the biggest buyers.
OPEC+ may cut production further
The Saudi Arabia-led OPEC+ announced early last month that it would cut production by more than 1 million barrels a day, calling it a precautionary measure to stabilise the oil market.
The move boosted oil prices to nearly $90 a barrel, but now international oil prices have fallen back to around $70 a barrel as market sentiment has turned pessimistic again.
The next OPEC+ meeting will be held on June 3-4 and it will be a face-to-face meeting rather than a virtual meeting online.
Helima Croft, head of commodity strategy at RBC Capital Markets LLC, said this shows OPEC+'s determination to stabilise the oil market, and that the OPEC group may choose to reduce crude supplies again then.