Saudi Arabia cuts oil price for Asia to 6-year low
What's the story
Saudi Arabia has announced a major cut in the price of its benchmark oil grade, Arab Light crude, to Asia. The state-owned company Aramco will now sell it at a discount of $5 per barrel from the regional benchmark for November. This is significantly higher than the $2 per barrel discount offered this month. The move comes as oil flows through the Strait of Hormuz have increased in recent months.
Pricing details
Aramco's official pricing
Aramco's official pricing is for crude sold under long-term contracts to refiners who usually collect these barrels at Ras Tanura inside the Persian Gulf.
Despite frequent attacks on ships in and around Hormuz, oil movement through this waterway has increased over the last few months.
The company has also raised November prices to Europe by $3 a barrel while keeping those to the US unchanged from this month.
Export dynamics
Shipping costs remain high due to lack of vessels
Middle Eastern crude exports have increased, with JPMorgan estimating they are now at 98% of pre-war levels.
However, shipping costs remain high due to a lack of vessels and the risk involved in transporting oil through this war-torn region.
Many customers are avoiding the route, forcing producers to shuttle their cargoes through Hormuz and transfer them in the Gulf of Oman.
Strategic moves
Saudi Arabia has restored oil flows through the East-West pipeline
Saudi Arabia has restored oil flows through the East-West pipeline to over 80% of capacity.
The volumes available for export via the Red Sea have reached wartime highs as the kingdom sends less to domestic refineries.
Meanwhile, Yemen's Saudi-backed government has launched a full-scale military campaign against Iran-backed Houthis in an attempt to retake territory.