Saudi Arabia Drops Asian Oil Prices to Six-Year Low
Saudi Arabia made a surprising move by slashing its oil prices for Asia in November to the lowest levels in six years. The official selling price (OSP) for Arab Light crude was set at $5 a barrel below the average of Oman and Dubai prices, marking a $3 decrease from the previous month. This discount is the widest since June 2020, according to Reuters data.
The reduction came despite expectations of a $5 a barrel increase, as suggested by a Reuters survey. The decision appears aimed at offsetting higher freight costs, which have surged due to disruptions from the US-Israeli conflict with Iran. The cost of chartering a very large crude carrier from the Gulf to China has skyrocketed to $1.2 million a day, compared to about $80,000 a day a year earlier.
State oil company Saudi Aramco also cut the OSPs for the heavier Arab Medium and Arab Heavy grades sold to Asia by $5 a barrel. The move is part of efforts to protect market share amid export disruptions. Aramco has been selling millions of barrels through ship-to-ship transfers outside the Strait of Hormuz to maintain pre-conflict oil flow levels.
Meanwhile, Saudi Aramco raised November OSPs for northwest Europe by $3 a barrel across all grades. Prices for buyers in the United States remained unchanged.