Qatar Cuts Prices for Its Oil

Qatar has followed Saudi Arabia in cutting the price of its al-Shaheen crude for May deliveries, Reuters has reported, citing trade sources.

Al-Shaheen for delivery in May will now cost $1.29 per barrel above the Dubai benchmark—or less. According to the Reuters sources, Qatar has already contracted four cargos of al-Shaheen for Vitol at a price of $1.17 per barrel above the Dubai benchmark. Another cargo has been committed to China’s CNOOC, at a price $1.30 per barrel above the Dubai benchmark.

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Al-Shaheen cargos for delivery in April were priced at $3.50 per barrel above the regional benchmark.

The move by Qatar follows Saudi Arabia’s decision earlier this month to lower the prices for the crude it sells for the first time in three months. The kingdom’s Arab Extra Light for Asia took the biggest hit, down 60 cents to $3.30 over Oman/Dubai. Other grades saw price reductions of between 30 and 40 cents per barrel.

The price cuts reflect a well supplied oil market, on the back of higher OPEC+ production, among other things, such as rising U.S. shale output that has consistently pressured oil prices. OPEC’s latest production update revealed higher output in Nigeria and Kazakhstan, the latter OPEC+ member exceeding its quota significantly, at 1.767 million bpd in actual production, compared with a quota of 1.468 million barrels daily.

The extended oil producers’ group said it would go ahead next month and unwind some of its output curbs, to the tune of 138,000 barrels daily. However, Russia’s Deputy Prime Minister Alexander Novak said earlier this month the decision could be reversed if there were “market imbalances”, echoing an OPEC statement that said “This gradual increase may be paused or reversed subject to market conditions. This flexibility will allow the group to continue to support oil market stability.”

By Charles Kennedy for Oilprice.com

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