Oil prices dropped Monday after Saudi Aramco slashed its official selling price for Asian buyers to a six-year-low discount, signaling that supplies are loosening as Middle East exports recover. West Texas Intermediate settled near $89 a barrel and Brent near $100, even as traders weighed fresh Hormuz-related headlines and OPEC+'s decision to hold output steady.
West Texas Intermediate futures fell 1.8% to settle at $89.43 a barrel, while Brent for December settlement dipped 1.9% to close at $100.32. The declines came after Saudi Arabia cut crude prices for Asian buyers, a sign that physical supplies are becoming more available as Middle Eastern exports recover.
Saudi Aramco deepens its price cut
Over the weekend, Saudi Aramco lowered the price of Arab Light for Asian buyers to $5 a barrel below a regional benchmark for November — a six-year low, compared with a $2 discount this month. Traders and refiners had instead expected a $5 rise from October, according to a Bloomberg survey. Aramco's official selling prices reached a record premium of $19.50 a barrel at the conflict's outset, after the Iran war began in February.
Hormuz flows recover, but risks persist
Flows through the Strait of Hormuz have picked up since the start of the war, yet shipping risks remain acute. The UK Maritime Trade Operations said a tanker transiting Hormuz was instructed by Iran on Monday to turn back or be targeted, and a separate incident was reported off Yemen's Al Mukha in the Red Sea.
Ole Sloth Hansen of Saxo Bank said the emergency releases and the Saudi price cut are weighing on prices, though Hormuz traffic remains volatile and exposed to disruption. Saudi Aramco Chief Executive Officer Amin Nasser, speaking at the Energy Intelligence Forum in London, said "While the squeeze on crude is serious, refined fuel prices have risen even more sharply."
OPEC+ holds steady as outlook stays mixed
Major OPEC+ nations agreed over the weekend to keep production quotas unchanged for next month, in line with the group's existing output roadmap. Still, bullish risks endure: Yemen's internationally recognized government has launched a campaign to retake Houthi-held territory, and Iran loaded no crude onto tankers last month.
Soni Kumari of ANZ Group Holdings said stronger flows and emergency stockpile releases are weighing on prices, but supply risks remain elevated. She sees prices holding between $95 and $100, with escalation able to push them back toward a recent high of $110. Bart Melek of TD Securities said he continues to expect sizable volatility across crude and refined products absent a comprehensive Iran-US agreement.
Source: Rigzone
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