Saudi Aramco has trimmed its Arab Light crude price for Asian buyers again, cutting the rate to one of the lowest levels the kingdom has set in more than two decades. The move lands as Brent crude slides toward $80 a barrel on hopes that a deal to reopen the Strait of Hormuz to freer tanker traffic is close.
Saudi Aramco has cut the price of its benchmark Arab Light crude oil for Asian customers by 50 cents a barrel, pricing next month's deliveries at $2 a barrel below the regional benchmark. That marks the fifth-lowest level the kingdom has set since 2000, according to a price list issued by the state producer.
The reduction comes as Persian Gulf producers keep moving barrels through the Strait of Hormuz ahead of a possible deal to open the waterway further. Iran said an agreement with Oman on a proposed shipping route through the strait was in its final stages, a potential step toward reopening the channel for energy supplies.
Brent slides on hopes of a Hormuz breakthrough
Brent crude has slumped this week to trade near $80 a barrel, a 20% drop over the last two weeks, as traders bet that flows through Hormuz may soon increase. The monthly Saudi price has long set the tone for Gulf oil delivered to global refiners, but the US-Iran war has squeezed regional flows and pushed up shipping costs, leaving only a limited pool of vessel owners willing to enter the Gulf while missiles fly overhead.
That geopolitical risk has not hit every exporter equally. The United Arab Emirates, in particular, has kept barrels moving even through the recent attacks, while Saudi flows through Hormuz have stayed muted as the kingdom leans on its Red Sea port of Yanbu for exports during the war. Houthi threats against Red Sea shipping have since put that alternate route at risk too, and Aramco has been discussing with Asian customers taking some deliveries from Egypt's Sidi Kerir port instead.
Aramco holds exports near 5 million barrels a day
Despite the disruption, Aramco has sustained crude exports at about 5 million barrels a day, Chief Executive Officer Amin Nasser said on an earnings call Tuesday. That is roughly 70% of the company's normal shipment level.
Heavier grades move the other way
The price refiners actually pay can differ from Aramco's official list, since extra pipeline and logistics costs apply when customers collect crude from Yanbu or Sidi Kerir instead of the Gulf. Aramco raised prices for its Medium and Heavy crudes bound for Asia next month, though those grades remain largely theoretical for now since they typically ship from the Gulf. For the US, Northwest Europe and the Mediterranean, it cut prices across all crude grades instead.
Asian refiners had pressed Saudi Arabia for discounts to offset the added cost of the longer route around Africa. Opening Hormuz to unrestricted tanker traffic would let Aramco ramp up shipments from its main export terminal at Ras Tanura on the Gulf, an outcome that renewed fighting and vessel attacks have repeatedly stalled.
Source: Rigzone
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