Saudi Arabia Cuts November Oil Prices For Asia To Six-Year Low Amid Record Freight Costs
Saudi Arabia has unexpectedly cut November crude oil prices for Asian buyers to their lowest level in six years amid soaring freight costs. Saudi Aramco reduced prices across key grades for Asia while raising them for northwest Europe, as disruptions linked to the Iran conflict reshape oil exports and shipping routes
Saudi Arabia has unexpectedly reduced its crude oil prices for Asian buyers for November to their lowest level in six years, while increasing prices for northwest Europe and the Mediterranean.
As per a Reuters report, Saudi Arabia, West Asia's biggest crude exporter, set the November official selling price (OSP) for Arab Light crude at $5 a barrel below the Oman-Dubai average, a reduction of $3 from the previous month.
The November discount is the widest since June 2020, according to Reuters data.
The move was unexpected as a Reuters survey had indicated that prices could rise by as much as $5 a barrel following gains in West Asian crude benchmarks.
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Saudi Aramco cuts prices amid freight surge
State oil company Saudi Aramco also reduced November OSPs for Arab Medium and Arab Heavy crude sold to Asia by $5 a barrel.
The reductions are aimed at helping buyers absorb sharply higher freight costs, according to three Asian refining sources cited by Reuters.
The cost of booking a very large crude carrier capable of transporting 2 million barrels from the Gulf to China reached $1.2 million a day on Friday, according to LSEG data. That compares with around $80,000 a day a year earlier.
The lower prices could also help compensate buyers for longer voyages and waiting periods for Saudi crude shipped from Egypt's Sidi Kerir port, where cargo loadings have faced delays.
Saudi Arabia adjusts oil export routes
Saudi Aramco has used ship-to-ship transfers outside the Strait of Hormuz to move millions of barrels since September amid disruptions linked to the US-Israeli conflict with Iran.
Saudi Arabia also resumed loading crude at Yanbu on the Red Sea after a brief suspension following a drone attack that shut the kingdom's key East-West oil pipeline.
While cutting prices for Asia, Saudi Aramco raised November OSPs for northwest European buyers by $3 a barrel across all crude grades.
Prices for customers in the US were left unchanged.
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