Saudi Arabia slashes Asia crude prices by $11 a barrel, steepest cut in 26 years
AI Market Summary
Saudi Aramco's $11/bbl cut to August official selling prices for Asia signals aggressive competition amid rising Gulf supply. The move exceeded expectations and, alongside resumed Strait of Hormuz shipping and higher export capacity utilization, increases near-term physical availability. With OPEC+ production hikes continuing, the pricing action reinforces softer Middle East differentials and pressures regional benchmarks, potentially weighing on broader crude pricing and refining margins in Asia.
Impact level
● High
Affected assets
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▼ Bearish
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Saudi Arabia has made its biggest reduction to official selling prices for Asian buyers in at least 26 years, as a wave of global supply sharpens competition for demand.
According to a pricing list, Saudi Aramco cut the August official selling price for Arab Light crude to Asia by $11 per barrel. The grade will be priced at a $1.50 per barrel discount to regional benchmarks, a deeper move than the $8 per barrel cut expected in institutional surveys.
Middle East crude prices have been sliding in recent weeks. Aramco has lifted crude exports to about 90% of pre-war levels after shipments resumed from Ras Tanura on the Persian Gulf. Ras Tanura was Saudi Arabia's main crude export terminal before the war.
With the war having blocked the Strait of Hormuz, Aramco had redirected most crude flows to Yanbu on the Red Sea. OPEC+ has agreed to maintain modest production increases in August. Now that transit through the Strait of Hormuz has resumed, Gulf producers including Saudi Arabia, Iraq and Kuwait are expected to be able to utilize their higher production quotas.
(Kingstone)
