Saudi Arabia has unexpectedly reduced its official selling prices for crude oil to Asian buyers for November, offering the deepest discount in six years as shipping costs remain sharply elevated.
Saudi Aramco has set the November price for its flagship Arab Light crude at $5 a barrel below the average of Oman and Dubai benchmarks. The price represents a $3 reduction from October and the widest discount since June 2020.
The decision surprised the market. A Reuters survey had indicated that traders expected Saudi Arabia to increase the price by as much as $5 a barrel, following gains in key Middle Eastern crude benchmarks.
Aramco also lowered the prices of Arab Medium and Arab Heavy crude for Asian customers by $5 a barrel.
Asian refiners said the cuts appeared designed to offset unusually high transportation costs and help Saudi Arabia maintain its position in the region. Freight rates have surged amid disruptions linked to the conflict involving the United States, Israel and Iran.
The daily cost of chartering a very large crude carrier capable of transporting about two million barrels from the Gulf to China reached around $1.2 million on Friday, according to LSEG data. That compares with roughly $80,000 a day a year earlier.
Industry sources said lower Saudi crude prices could also compensate buyers for longer journeys and delays affecting shipments. Some Saudi cargoes have faced delays at Egypt’s Sidi Kerir port, adding to transportation costs.
Saudi Arabia has taken steps to keep oil exports moving despite disruptions around the Strait of Hormuz. Since September, Aramco has moved millions of barrels through ship-to-ship transfers outside the strategic waterway, helping oil flows through the strait return to levels seen before the conflict.
The kingdom also resumed crude loading at Yanbu on the Red Sea after a temporary suspension caused by a drone attack that disrupted its East-West oil pipeline.
While prices for Asian customers were reduced, Aramco moved in the opposite direction in Europe. The company raised its November official selling prices for northwest European buyers by $3 a barrel across all crude grades.
The contrasting pricing strategy highlights Saudi Arabia’s efforts to protect its Asian market share while responding to higher freight expenses and changing global oil trade routes.
