Aramco slashes oil price by its biggest margin in 25 years

Saudi Aramco is slashing crude prices with its biggest discount in 25 years.

The state oil giant cut the price of its flagship Arab Light crude for Asian buyers by $11 a barrel for next month, leaving it $1.50 below competing grades from the region. It’s the first time since 2020 that Saudi Arabia has sold Arab Light at a discount, and the biggest monthly reduction in its official selling prices since at least 2000, Bloomberg reports.

China, meanwhile, has sharply increased purchases of Middle Eastern crude, buying at least 26 million barrels for July and August delivery from Qatar, Saudi Arabia, the UAE and Iraq, the Financial Times reports. 

The price cuts come as Gulf producers ramp up exports through the Strait of Hormuz following an interim U.S.-Iran deal, which has swollen regional supplies.

Still, an LNG tanker owned by Qatar’s state shipping company Nakilat was struck by a projectile, believed to be a drone or missile, near the Omani coast after exiting the Gulf waterway, sparking a fire that caused severe damage, Reuters reports.

Aramco, ADNOC cutting back on M&A amid decline in oil prices

The Gulf’s largest state-owned oil companies are adapting to lower crude prices in the foreseeable future by cutting back on multibillion-dollar acquisitions and selling assets.

Both Saudi Aramco, the world’s largest petroleum exporter, and Abu Dhabi-based ADNOC have slowed down their M&A activities as they assess what the 16% drop in oil prices this year will mean for their bottom lines, the Financial Times reports.

Over the past three years, Aramco and ADNOC have been the oil industry’s most active dealmakers, announcing more than $60 billion of acquisitions as the two giants expanded into gas, chemicals and lubricants.

With oil prices falling to $67 a barrel this week and analysts predicting continued oversupply in the market, both companies are looking at ways to cut spending and curb their appetites for big acquisitions, the newspaper said.

Saudi Arabia’s Public Investment Fund, meanwhile, reported that net profit fell by more than half last year to about $7 billion, reflecting the impact of lower crude prices for the sovereign wealth fund, which owns a 16% stake in Aramco.

The PIF’s income from investment activities, however, gained 38% from the previous year, pushing the fund’s total assets under management above $1 trillion, second among Gulf sovereign wealth funds to the Abu Dhabi Investment Authority.