In a strategic move, Saudi Arabia is set to lower its crude oil prices for Asian markets in October. This decision comes amid weakening refining margins in China and the broader Asian region, coupled with a decline in the Dubai benchmark price.
Saudi Aramco, the state oil giant, is expected to announce a reduction in the official selling price (OSP) for its flagship Arab Light crude by 50 to 70 cents per barrel. This adjustment reflects the ongoing challenges faced by refiners in Asia, particularly in China, where economic slowdowns in manufacturing and property sectors have dampened fuel demand.
The anticipated price cut is also influenced by the recent trends in the Dubai benchmark, which saw a decline last month. This benchmark is crucial as it sets the pricing standard for Middle Eastern crude exports to Asia. Additionally, the increase in OPEC+ supply, scheduled to begin in October, has further pressured prices.
Saudi Arabia’s decision to lower prices is seen as a response to maintain its market share in the competitive Asian market. The move is expected to impact other Middle Eastern oil exporters, including Iran, Kuwait, and Iraq, who typically follow Saudi Aramco’s pricing trends.
This price adjustment comes after Saudi Aramco raised its prices in September, marking the first increase in three months. The upcoming reduction highlights the dynamic nature of the global oil market and the strategic maneuvers by major oil producers to adapt to changing economic conditions.