Saudi Arabia has set the official selling price of 'Arab Light' crude oil to Asia in November at $5 a barrel below the average of Oman and Dubai prices, down $3 from the previous month.
Saudi Arabia has abruptly cut crude oil prices for Asia in November, while raising prices for northwest Europe and the Mediterranean, a pricing document released on Monday revealed.
Saudi Arabia, the largest crude oil exporter in West Asia, cut the official selling price (OSP) of its Arab Light Crude by $3 per barrel in November. It will now be available at a discount of $5 per barrel below the average benchmark of Oman and Dubai, the largest discount since June 2020.
Saudi Arabia's decision to cut oil prices contradicts a Reuters survey that had predicted a $3 per barrel increase in November oil prices, reflecting a rise in West Asian benchmarks. Saudi Aramco, the Saudi oil company, further cut the November oil prices for its heavy grades of oil sold to Asia – Arab Medium and Arab Heavy – by $5 per barrel.
What will be the impact on India?
Saudi Arabia already offers Asian countries a $2 per barrel discount on its Arab Light crude for delivery in the current month, October. This has now been increased by another 3% for November delivery. India imports more than 80% of its oil needs, and Saudi Arabia is India's second-largest supplier.
If rates are lower, it will become much cheaper for Indian state-owned oil companies like Indian Oil (IOCL) and BPCL to purchase raw materials, increasing their profit margins. Although Brent crude prices remain above $100 due to global tensions, this substantial $5 discount from Saudi Arabia will stabilize petrol and diesel prices at the retail level in India, and the likelihood of further increases will also be significantly reduced.
Why is Aramco so kind to Asia?
Due to the war between America and Iran and the ongoing tension in the Middle East, the fares of large ships (VLCC) carrying oil through the sea have increased to record levels.
The cost of booking an oil tanker from the Persian Gulf to China has risen from $80,000 per day last year to $1.2 million per day now. Aramco has made these reductions to ease the burden of these increased freight charges on Asian refiners like IOC and BPCL, so they don't stop buying oil from Saudi Arabia.
Saudi Arabia fears this because countries like Russia and Iran already supply oil to major oil buyers like India and China at steep discounts. Saudi Arabia fears losing its market share amid these conflicts. Therefore, price reductions are a good solution.
Why the sudden surge in oil prices?
On Saturday, October 3, 2026, Houthi rebels launched a series of attacks using ballistic missiles and drones on Aramco facilities in Saudi Arabia's capital, Riyadh, and the Khurais region. This is why crude oil prices are seeing a surge today. Brent crude oil rose 0.79% to $103.06 per barrel. WTI crude oil also jumped 0.50% to trade at $91.57 per barrel.
