Saudi Arabia cuts crude prices for Asia by widest margin in six years

Saudi Arabia has taken the market by surprise with deep cuts to its November crude oil prices for Asia, defying expectations of an increase. The state oil company Saudi Aramco (2222.SE) reduced prices for its flagship Arabian Light grade by $3 per barrel, setting it $5 below the Oman/Dubai average, the steepest discount in six years. Heavier grades saw even larger cuts of $5 per barrel. This aggressive pricing strategy appears aimed at maintaining market share amid rising Middle East exports and geopolitical tensions.

The decision contrasts sharply with a Reuters survey that predicted a $3 price increase. Aramco also raised prices for Northwest Europe by $3 across all grades, citing resumed exports from Yanbu Port, while U.S. prices remained unchanged. The cuts come as Middle East crude exports recover to near pre-conflict levels, despite ongoing attacks in the Strait of Hormuz. Shipping data shows exports exceeding pre-war levels on multiple days in late September.

Crude futures reacted negatively to the news, with Brent and WTI both declining in Asian trading. The G7's planned release of 100 million barrels from strategic reserves added to downward pressure. Analyst Tim Waterer of KCM Trade noted that supply concerns are easing due to both reserve releases and recovering Saudi exports, though geopolitical risks persist.

Yemen's Houthi group claimed missile and drone attacks on Saudi targets, escalating regional tensions. However, OPEC+ maintained November production targets at its latest meeting, postponing decisions on 2027 quotas due to uncertainty from the conflict. Saudi Arabia's price cuts may signal a broader shift toward competitive pricing in the global oil market.