Saudi Arabia surprisingly cuts official sales price of crude oil bound for Asia in November

Decreased by $3 compared to the previous month... Highest discount since June 2020

To protect market share by compensating for rising freight rates in Asia

(Seoul = Yonhap News) Reporter Song Jin-won = Saudi Arabia, the largest oil producer in the Middle East, surprisingly lowered the Asian sales price of crude oil for delivery in November, Reuters reported on the 5th (local time).

According to documents related to crude oil prices, Saudi Arabia set the official sales price of Arab Light (light crude oil) destined for November delivery to Asia by $5 (6,700 won) per barrel lower than the average price of Oman oil and Dubai oil. This is a decrease of $3 (3,000 won) compared to the previous month, and according to Reuters data, this discount is the largest since June 2020.

This is a result that runs counter to the expectation that the official selling price in November will increase by $3 per barrel in a survey conducted by Reuters due to the rise in Middle Eastern benchmark oil prices.

Saudi Aramco, a state-owned oil company, further reduced the official selling prices of Arab Medium (heavy oil) and Arab Heavy (heavy oil) sold to Asia by $5 per barrel in November.

Sources familiar with the matter said last week that Saudi Aramco was considering discounting crude oil it ships from Oman to offset the burden on buyers caused by a record rise in freight rates.

This can be interpreted as a measure to avoid losing the Asian market to competitors such as the United Arab Emirates (UAE) at a time when exports have been hit by regional disputes.

On the other hand, Saudi Aramco increased the official selling price of crude oil for November delivery to Northwest Europe by $3 per barrel for all oil types following the resumption of crude oil exports from Yanbu Port on the Red Sea coast.

Prices for US buyers remained the same.

Seven countries (Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman) belonging to OPEC+, a group of major oil producing countries, agreed the previous day to maintain their November crude oil production target at the current level due to the forecast that additional production policy adjustments will be difficult before next year.