Aramco Cuts Official Selling Price of Arab Light Crude to Asia by $3

Saudi Aramco lowered the official selling price for Arab Light crude bound for Asia by $3 per barrel for November, setting the discount at $5 below the Oman/Dubai benchmark, its widest discount since June 2020. The company also reduced prices for heavier grades bound for Asia by $5 per barrel, according to Reuters.

In contrast, Aramco raised the official selling prices for its crudes destined for Northwest Europe and the Mediterranean region by $3 per barrel, while keeping prices for the United States unchanged. This disparity reflects the company's effort to direct shipments toward higher-yield markets amid a recovery in export activity.

The decision followed a clear recovery in shipping traffic through the Strait of Hormuz, as Saudi crude transit rose from about 1.4 million barrels per day in late August to about 4.1 million barrels per day last week. Furthermore, the OPEC+ group decided to keep November production unchanged, meaning Saudi supply will continue at its current levels.

The official selling price serves as an indicator monitored by Asian buyers to determine supply costs for the coming month, directly impacting the competitiveness of Saudi crude against UAE, Kuwaiti, and Iraqi crudes. The widest discount in more than five years signals the company's pressure on its market share amid growing global supply.

What do these terms mean?

Official Selling Price: The price set by a producing country to sell its crude to each region separately, varying from one destination to another based on supply and demand. Arab Light Crude: One of the most famous Saudi crudes and the most exported to the Asian continent. Oman/Dubai Benchmark: A pricing standard used to measure Middle Eastern crude prices in the Asian market. Strait of Hormuz: The sea passage through which most Gulf oil exports pass. OPEC+: An alliance comprising OPEC members and non-OPEC producers that agree on production levels.