Saudi Arabia Slashes Oil Price Amid Global Supply Surge

Saudi Arabia's state oil company, Saudi Aramco, cut the official selling price (OSP) for its flagship Arab Light crude to Asia by $11 a barrel in August, marking the biggest drop in over two decades. According to Reuters data dating back to 2003, this reduction is the largest on record.

The OSP for Northwest Europe was also lowered to a premium of $0.85 a barrel to ICE Brent, down $15 a barrel from the previous month. In contrast, OPEC+ agreed to increase output targets from August, adding to global supply at a time when oil prices are falling due to the gradual reopening of the Strait of Hormuz for oil exports.

The price cuts exceeded forecasts in a Reuters survey conducted in late June, which had pointed to a premium of $1.50 to $3.00 a barrel. Since then, spot crude prices have fallen further as Gulf producers increased supplies, adding downward pressure on the market.