Saudi Arabia is set to lower its main crude oil price for the Asian market. This price cut follows a recent announcement by OPEC+ regarding a substantial increase in global oil supply, exceeding market expectations.
According to Bloomberg on Sunday, April 6, 2025, Saudi Arabia’s state oil company, Aramco, will reduce the price of Arab Light crude for May shipments by $2.30 per barrel to Asian countries. This marks the largest reduction in over two years. The price cut comes after a series of significant price hikes from Saudi Arabia in recent months, although this drop is larger than what market participants and analysts had anticipated in a Bloomberg survey.
This decision follows the OPEC+ announcement on April 3, 2025, which stated that they would increase global oil supply by more than 400,000 barrels per day starting next month—three times more than initially planned. Delegates indicated that the goal of this increase is to enforce production discipline among OPEC+ members, particularly countries like Kazakhstan and Iraq, which have struggled with adherence to their quotas. The additional supply from OPEC+ will complement production increases that began this month as part of a rollback on the production cuts implemented since 2022. OPEC+ also plans to continue boosting output in the coming months, albeit at a smaller scale.
Oil Price Drop Amidst Global Demand Concerns
The acceleration in production comes amid growing concerns about weak global demand, a situation that has surprised many market observers. Brent crude oil prices in London even briefly dropped below $65 per barrel over the weekend, marking the lowest level in over three years.
Despite these drops, Saudi Arabia needs oil prices above $90 per barrel to balance its national budget. Meanwhile, U.S. President Donald Trump has continued to press OPEC+ to lower oil prices as part of efforts to curb inflation and increase economic pressure on Russia in the context of the ongoing war in Ukraine.
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