Saudi Aramco delays price release to after Opec+ meet

Saudi state-controlled Aramco will delay the release of its official May formula prices until after the scheduled 9 April meeting of Opec and partner countries, according to a source close to the matter.

The official sale prices were initially expected to be announced today.

Aramco typically circulates its sale prices within the first five days of the month that precedes loading. This will be the second consecutive month that the state-controlled energy giant opts to postpone its official formula price beyond its traditional deadline.

The Saudi delay could also push back the publication of official prices from fellow Mideast Gulf producers Iraq, Kuwait and Iran, who typically mirror Aramco's month-on-month movements. Clients have yet to receive communication from Aramco announcing the official price delay, a term buyer said. The price release postponement is likely to also set back Aramco's nomination and allocation process.

Saudi Arabia's previous delay — and the failure of the early-March Opec and non-Opec talks to extend their production restraint agreement past the first quarter — saw the company aggressively slash its official April prices to record-lows, sparking a battle for market share. Aramco accompanied its drastic April price discounts with announcements that it would dramatically increase supply to the market, including domestic consumption, to 12.3mn b/d — a target currently under question, as coronavirus-linked cuts in global demand have threatened some buyers' ability to absorb volumes in excess of typical monthly nominations.

Prior to the Saudi Arabia's call for an extraordinary meeting of Opec and non-Opec producers — collectively known as Opec+ — late last week, market participants had expected Aramco to roll over or further cut its May prices. Mideast Gulf producers may ultimately no longer face pressure to deeply reduce their sale prices if the Opec+ group agree on additional production cuts. Russian president Vladimir Putin last week advocated for an output cut of around 10mn b/d from first-quarter production levels.

The Opec+ group had initially planned to hold a video conference on 6 April. But their meeting has since been rescheduled for 9 April. The decision came amid escalating tensions between Saudi Arabia and Russia over who was to blame for the failure of the early-March talks and the subsequent plunge in oil prices.

After discussing the state of the oil market with both Russia and Saudi Arabia, US president Donald Trump last week appeared optimistic that the two de facto Opec+ leaders would agree to scale back production by as much as 10mn or 15mn b/d.

But, following the recent back-and-forth between Saudi Arabia and Russia, Trump seems to have changed his tune somewhat, saying yesterday that he does "not care about Opec," and that he would do whatever it takes to protect the US energy sector,including a potential imposition of tariffs on oil imports.

By Ruxandra Iordache