Saudi Arabia unexpectedly cuts November oil prices to Asia to lowest in 6 years
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The largest Middle Eastern crude exporter set the November Arab Light crude oil official selling price to Asia at US$5 a barrel below the average of Oman and Dubai prices, down US$3 from the previous month.
PHOTO: REUTERS
Saudi Arabia unexpectedly cut its oil prices for sale to Asia in November to their lowest in six years, while raising them for north-west Europe and the Mediterranean, a pricing document showed on Oct 5.
The largest Middle Eastern crude exporter set the November Arab Light crude oil official selling price (OSP) to Asia at US$5 a barrel, below the average of Oman and Dubai prices, down US$3 from the previous month.
The discount for November is the widest since June 2020, Reuters data showed.
This was against expectations of a US$3 a barrel hike for its November OSP in a Reuters survey in line with gains seen in the Middle Eastern benchmarks.
State oil company Saudi Aramco cut the November OSPs of heavier grades, Arab Medium and Arab Heavy, sold to Asia by US$5 a barrel.
Aramco has been looking at offering discounts for oil loaded off Oman to compensate buyers for record freight rates, sources familiar with the matter said last week, as it sought to protect its market share after disruptions from the US-Israeli war against Iran affected exports.
The OSP cuts appeared to be aimed at compensating buyers for the elevated freight costs, said three Asian refining sources who spoke on condition of anonymity.
The cost of booking a very large crude carrier capable of hauling two million barrels of oil from the Gulf to China on a time charter basis was US$1.2 million (S$1.53 million) a day on Oct 2, according to LSEG data. It was about US$80,000 a day a year ago.
One of the sources also said the lower OSPs could offset the waiting time and longer voyage for Saudi oil exported from the Egyptian port of Sidi Kerir, where cargo loadings have been delayed.
Since September, Saudi Aramco has sold millions of barrels of crude through ship-to-ship transfers outside the Strait of Hormuz, pushing oil flows through the strategic waterway to pre-conflict levels.
The kingdom also resumed loading at the port of Yanbu on the Red Sea after a brief suspension as a drone attack shut its key East-West oil pipeline.
Separately, Saudi Aramco raised the November OSPs for north-west Europe by US$3 a barrel across all grades.
Aramco kept prices unchanged for buyers in the United States. REUTERS