RIYADH — Saudi Arabia has announced a reduction in oil prices for its largest market, Asia, as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) prepare to ease production restrictions.

The move, led by state oil giant Saudi Aramco, comes amid a backdrop of oversupply concerns and weaker refining margins globally.

Saudi Aramco (TADAWUL:2222) revealed it would lower the price of its flagship Arab Light crude for Asian buyers by 40 cents per barrel for April, setting the premium at $3.50 a barrel above regional benchmarks.

This reduction is notably larger than the 15-cent decrease anticipated by traders and refiners, according to a survey conducted by Bloomberg. It also marks the first price cut in three months, following a significant increase in March.

The decision to reduce prices aligns with the broader OPEC+ strategy to gradually increase oil output starting next month.

The coalition, led by Saudi Arabia and Russia, agreed to ease the production curbs that had been implemented to stabilize the market during the pandemic.

The move comes in response to pressure from U.S. President Donald Trump, who has been vocal about his desire for lower oil prices.

Market reactions were swift, with oil prices dipping earlier this week as traders factored in the anticipated supply increase.

Brent crude futures, the international benchmark, fell below $70 a barrel for the first time since October, reflecting concerns about a potential glut. Middle Eastern oil markets also faced downward pressure following OPEC+’s decision to ramp up production.

Saudi Aramco’s Chief Financial Officer, Ziad Al-Murshed, acknowledged that refining margins remain weaker than preferred despite a drop seen in 2024.

Speaking during an earnings call on Tuesday, Al-Murshed highlighted the ongoing challenges faced by refiners globally.

However, Aramco’s Chief Executive, Amin Nasser, struck a more optimistic tone, expressing confidence that global oil demand remains robust and could reach record levels by the end of the year.

In addition to adjusting prices for Asia, Saudi Aramco also announced reductions for customers in northwest Europe and the Mediterranean.

Prices for U.S. buyers, however, will remain unchanged. The adjustments reflect a strategic approach to managing market share across different regions amid evolving global demand patterns.

The oil market continues to navigate a complex landscape marked by geopolitical tensions, supply chain disruptions, and evolving energy policies.

The recent series of tariffs imposed by the U.S. has also raised concerns about potential impacts on global oil consumption, adding another layer of uncertainty.

As OPEC+ moves forward with its planned output hikes, market observers will be closely watching inventory levels and refining margins for further indications of price trends.

The latest price adjustment by Saudi Arabia suggests a cautious yet responsive strategy aimed at balancing market share with the realities of a potentially oversupplied market.