Saudi Aramco Cuts Asian Oil Prices to Six-Year Low
Saudi Aramco has slashed prices for its benchmark crude oil grade to Asia, marking a six-year low as Persian Gulf producers compete fiercely for market share. The state-owned company will reduce the price of Arab Light crude for Asian buyers by $5 a barrel below the regional benchmark for November, a significant drop from the $2 discount offered this month. Traders and refiners had anticipated a $5 increase for November, according to a Bloomberg survey.
The unexpected price cut signals that the world’s largest oil exporter is aiming to boost sales in Asia, joining other Persian Gulf producers in the effort. Meanwhile, Aramco raised November prices to Europe by $3 a barrel and kept US prices unchanged from this month.
Despite ongoing attacks on ships in and around the Strait of Hormuz, oil flows through the waterway have rebounded in recent months. Saudi Arabia has restored much of the capacity of the East-West pipeline after it was damaged in an attack, allowing crude exports from the Middle East to recover. JPMorgan Chase & Co. estimates that exports are now at 98% of pre-war levels.
As passage through Hormuz remains risky, many customers are avoiding the route, forcing producers to shuttle cargoes through Hormuz and transfer them in the Gulf of Oman. Asian refiners have been instructed by Saudi Aramco to submit nominations for volumes they wish to pick up next month from various ports, including those within the Persian Gulf, Yanbu on the Red Sea, or the Mediterranean port of Sidi Kerir.