Aramco cuts Arab Light price to Asia by $2 to lowest level since 2020
Key Facts
Aramco cut the official selling price of Arab Light crude for December shipments to Asia by $2 a barrel from November, to a discount of $6.50 to the Oman/Dubai average, according to Reuters via Zawya. The discount is the widest since May 2020, when prices fell during the pandemic. The decision came after market participants expected prices to hold steady or fall by as much as $2 a barrel. They said ample Middle East supply and weak spot market premiums could prompt Aramco to offer prices that were more attractive to buyers. The cut puts pricing for Asian shipments at the forefront of indicators of renewed competition for demand in the largest crude-importing region.
The December adjustment was not limited to the Asian market: Aramco cut prices for all grades sold to Northwest Europe and the Mediterranean by $1 a barrel, while leaving prices for the United States unchanged, the report said. The divergence highlights differences in selling conditions across markets, with cuts directed at regions where demand indicators or crude premiums have weakened. Participants’ expectations for Asia had ranged from prices holding steady to cuts of as much as $2, making the actual reduction consistent with the upper end of those forecasts. They linked their estimates to ample regional supply and weak spot market premiums. The official prices thus show a direct response to shifts in the balance of supply and demand among major export regions.
Spot premiums for Middle Eastern crude returned to pre-war levels during the week covered by Reuters, before the U.S.-Israeli war on Iran. Producers increased exports despite escalating attacks on tankers crossing the Strait of Hormuz, signaling improved available flows after supply disruptions. Meanwhile, declining refining margins in Asia dampened buyers’ interest, limiting the ability of discounts alone to stimulate demand. The market is therefore combining greater crude availability with relatively weak incentives for refineries to buy. These factors explain the return of Saudi discounts to levels not seen in years, while security risks along shipping routes persist.
Production forecasts reinforce the picture of a recovery in Saudi supply: HSBC raised its estimate for the kingdom’s crude output in the fourth quarter to 8.3 million barrels per day from 6.3 million, citing a faster-than-expected recovery in exports. The International Energy Agency expects global oil demand to contract by an average of 2.6 million barrels per day in 2026, and by 2.5 million barrels per day year on year in the fourth quarter. The agency expects a partial recovery of 2 million barrels per day in 2027, with global oil use remaining below 2025 levels, according to its October report. The agency’s balances also showed supply exceeding demand by an average of 1.4 million barrels per day in 2025, with the surplus reaching more than 2 million barrels per day in the second half of the year. This provides broader context for producers’ competition for buyers as regional exports recover.
In its price forecasts, the U.S. Energy Information Administration said in October that Brent crude could average $105 a barrel in the fourth quarter of 2026, up $14 from its forecast for the previous month, assuming oil flows from the Middle East remain restricted during the quarter. On production, 7 OPEC+ participating countries decided to keep required production levels for September unchanged during November and announced that they would continue holding monthly meetings to review market conditions. The next meeting was scheduled for November 1, 2026, according to an OPEC statement issued on October 4. These dates place the next production review in a context of rapidly shifting flows and exports, while Saudi official prices reflect a change in the balance of the Asian market. Weak refining margins remain a direct factor in how quickly buyers respond to discounts.