Saudi Aramco cuts oil prices to Asia in market share push

Saudi Aramco has slashed its benchmark oil prices to Asia to a six-year low, signaling an aggressive push to secure market share amid rising Middle East tensions. The state-owned oil giant will reduce the price of Arab Light crude to buyers in Asia by US$5 a barrel below the regional benchmark for November, a sharp drop from the US$2 discount offered in October. Traders had anticipated a US$5 price increase, making this unexpected cut a clear move to boost sales in Asia.

While Saudi Arabia lowered prices to Asia, it raised November prices to Europe by US$3 a barrel and kept US prices unchanged. The price cuts come as Gulf producers compete for market share, with oil flows through the Strait of Hormuz increasing despite ongoing attacks on ships. JPMorgan Chase & Co. reported that Middle East crude exports have rebounded to 98% of pre-war levels, thanks in part to the restoration of the East-West pipeline after recent damage.

Saudi Aramco has also advised Asian refiners to submit nominations for oil volumes they wish to pick up from various ports, including those within the Persian Gulf, Yanbu on the Red Sea, and the Mediterranean port of Sidi Kerir. This precaution is in response to potential disruptions in the Strait of Hormuz. Meanwhile, fighting in the Middle East continues to escalate, with Yemen’s Saudi-backed government launching a military campaign against Iran-backed Houthi forces, keeping shipping costs high due to the risks of moving oil through the region.