Saudi Aramco has cut prices for its flagship crude grade sold to Asian buyers to a six-year low, as the world’s largest oil exporter competes for market share amid a recovery in oil shipments through the Strait of Hormuz.
The state-owned Saudi oil company will sell Arab Light crude to Asian customers at a discount of $5 a barrel below the regional benchmark for November, widening the discount from $2 a barrel in October, according to a Bloomberg survey.
Traders and refiners polled by Bloomberg had expected Aramco to raise prices by $5 a barrel for November.
The price reduction signals that Saudi Arabia may be seeking to boost sales to Asia as oil flows from the Middle East recover after months of disruption linked to the Iran war. Aramco raised its November crude prices for Europe by $3 a barrel, while leaving prices for the US unchanged from October, Bloomberg reported.
Although attacks on vessels in and around the Strait of Hormuz continue, the volume of oil passing through the waterway has increased over the past few months.
Saudi Arabia sold almost 100 million barrels of oil to Asian buyers in mid-September, helping to avert a looming supply crunch. The kingdom has also restored much of the crude flow through its East-West pipeline after suffering damage in an attack. The recovery has helped increase oil exports from the Middle East, with JPMorgan estimating last week that shipments had reached 98 per cent of prewar levels, Bloomberg reported.
The pipeline allows Saudi Arabia to transport crude from its eastern oilfields to the Red Sea port of Yanbu, providing an alternative export route that bypasses the strait.
Aramco’s official selling prices apply to crude supplied under long-term contracts to refiners, who would typically collect their shipments from Ras Tanura on Saudi Arabia's Gulf coast.
Ras Tanura hosts one of the world’s largest oil export terminals and a major refining facility. The port handles a significant share of Saudi crude exports, with cargoes typically heading to markets in Europe and Asia, including China, Japan and South Korea.
But continued risks to shipping through the strait have prompted many customers to avoid the route.
Aramco has asked Asian refiners to submit nominations for the volumes they intend to collect in November from ports inside the Arabian Gulf, as well as from Yanbu on the Red Sea and Sidi Kerir on Egypt's Mediterranean coast, Bloomberg reported.
