Saudi Arabia Slashes Asian Oil Prices to Six-Year Low

Saudi Arabia has made a surprising move by slashing its oil prices for Asian buyers while raising them for European customers. The kingdom set its November Arab Light crude oil price to Asia at $5 below the average of Oman and Dubai prices, marking a $3 decrease from the previous month. This discount is the widest since June 2020, defying expectations of a price hike as predicted in a Reuters survey.

State-owned Saudi Aramco also cut prices for heavier grades, Arab Medium and Arab Heavy, by $5 per barrel for Asian markets. Industry sources suggest the cuts aim to offset elevated freight costs, which have surged due to disruptions caused by 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 per day, up from $80,000 a year ago.

Additionally, the lower prices may compensate for delays at the Egyptian port of Sidi Kerir, where cargo loadings have been impacted. Since September, Saudi Aramco has rerouted millions of barrels of crude through ship-to-ship transfers outside the Strait of Hormuz, restoring pre-conflict oil flow levels. The kingdom has also resumed operations at the Red Sea port of Yanbu after a brief shutdown due to a drone attack.

In contrast, Saudi Aramco raised November oil prices for northwest Europe by $3 per barrel across all grades, while keeping prices unchanged for US buyers.