Saudi Aramco Cuts December Arab Light Crude OSP for Asia by $2 to Six-Year Low

(1) Saudi Aramco on Friday cut the official selling price of Arab Light crude for Asian customers in December by $2 per barrel from November, widening the discount to the Oman/Dubai average to $6.50 per barrel, the lowest level since May 2020 during the COVID-19 pandemic.

(2) Pricing documents showed Saudi Aramco also cut prices for all crude grades for Northwest Europe and the Mediterranean in December by $1 per barrel, while keeping U.S. prices unchanged.

(3) A survey last week showed that due to ample Middle East crude supply and weaker spot premiums, market participants had originally expected Saudi Aramco to keep Asian prices unchanged, or cut them by at most $2 per barrel to attract buyers.

(4) This week, spot premiums for Middle East benchmark crude grades fell back to levels before the U.S.-Israel war against Iran broke out; despite an increase in attacks on tankers transiting the Strait of Hormuz, producers expanded exports, driving supply higher, while cooling Asian refining margins also dampened buying interest.

(5) HSBC said export recovery was faster than expected and raised its forecast for Saudi crude production in the fourth quarter to 8.3 million barrels per day from 6.3 million bpd; it also raised its 2027 Saudi production forecast to 9.8 million bpd from 8.8 million bpd, and expects Saudi crude production to recover to about 10 million bpd by mid-2027.