Saudi Aramco, the world’s largest state-owned oil company, lowered its official selling prices for all crude grades for customers in Northwestern Europe and the Mediterranean for January. Asian price changes were mixed and a new benchmark was used for U.S. customers.

The company cut the price of its Arab Extra Light Crude the most, for
European buyers, widening the discount versus the Brent benchmark to
$1.65 a barrel in January from a discount of $1.05 in December,
Dhahran-based Aramco said in an e-mailed statement on Dec. 5. The Brent
price is the weighted average crude benchmark posted by
Intercontinental Exchange.

Saudi Arabia’s state-owned producer set the price for its Light crude
oil for January loadings for U.S. buyers at a 75 cents-a-barrel
discount to the Argus Sour Crude Index. Also for U.S. buyers, Saudi
Medium will sell at a $1.95-a-barrel discount, Heavy at a $3-a-barrel
discount, and Extra Light at an 80 cents-a-barrel premium to the ASCI
benchmark.

This is the first month Aramco is pricing crude against a new U.S.
benchmark. The company said Oct. 28 it will use the ASCI marker, an
index of high-sulfur oil produced in the Gulf of Mexico, to price crude
for sale to U.S customers.

The new benchmark replaces a West Texas Intermediate crude price
published by Platts, the energy-information division of McGraw Hill
Cos. WTI crude, a lighter, more expensive crude grade, also trades as a
futures contract on the Chicago Mercantile Exchange’s New York
Mercantile Exchange.

Production Cuts

The Persian Gulf state, OPEC’s largest member and de-facto leader, was
the second-biggest crude exporter to the U.S. last year after Canada,
according to the Energy Information Administration. The country has led
production cuts announced by the Organization of Petroleum Exporting
Countries last year in an attempt to support crude prices.

Aramco lowered the price for Saudi Light for Northwest European buyers,
widening the discount against Brent to $2.30 a barrel from $1.80, and
to $2.25 from $1.80 for Mediterranean customers.

The price formula for Extra Light crude sold to Asia was kept unchanged
at a $1.25-a-barrel premium to the average of Oman and Dubai grades,
the two Arabian Gulf benchmarks used by Asian oil traders, the company
said. Aramco lowered the premium for Light crude by 5 cents to 45 cents
and it raised prices for Super Light, Medium and Heavy crudes to Asia.
Medium crude is now priced at a 45-cent discount for January, versus
the 55-cent discount Asian buyers had in December.

The following table gives the differentials of the four regions in
relation to benchmark prices, the month-on-month change and the degrees
of gravity as defined by the American Petroleum Institute. Prices are
in U.S. dollars a barrel.

Source: Bloomberg

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