Saudi Aramco Lowers Crude Prices, Offers Relief to Indian OMCs Amid Looming LNG Costs

Saudi Aramco's decision to lower crude oil prices has given Indian state-run oil marketing companies (OMCs) some much-needed relief, but this reprieve may be short-lived as rising liquefied natural gas (LNG) costs loom on the horizon. According to Equirus Securities, Saudi Aramco's official selling price (OSP) for September-loading Arab Light crude has been discounted by $2 per barrel compared to the Oman/Dubai benchmark.

The lower OSP marks the lowest level since June 2020 and represents a reversal from steep premiums that reached as high as $19.50 per barrel in May, $15.50 in June, and $9.50 in July. Equirus Securities noted that this pricing decision signals an effort by Saudi Arabia to defend its market share in Asia and stay competitive amid recovering Gulf supplies.

For Indian refiners such as Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL), the lower OSP provides crucial cost relief at a time when conflict-driven freight and insurance costs had increased by $9 to $10 per barrel. However, the report warned that higher LNG prices will start to bite from September as the momentum from front-loaded deliveries begins to fade.