Saudis Cut Key Oil Price Again as Hormuz Talks Progress

Saudi Aramco has cut its Arab Light crude price for Asia by 50 cents a barrel for next month, amid expectations of expanded Strait of Hormuz access. The price cut is significant, as volatile Gulf oil flows and high shipping costs have complicated pricing, while Brent crude has fallen about 20% in two weeks. The monthly Saudi crude price has long been a benchmark for regional producers, setting the tone for the cost of oil delivered from the Persian Gulf to global refiners. With the U.S.-Iran war cutting the flow of barrels from the region, it’s been much harder for buyers and sellers to price that oil, particularly given soaring shipping costs. Iran said an agreement with Oman on a proposed route for shipping through the critical waterway was in the final stages, a potential step toward reopening the channel for energy supplies. Saudi Aramco will reduce its Arab Light oil price for delivery to customers in Asia next month by 50 cents a barrel to $2 a barrel less than the regional benchmark. The company has sustained crude exports at about 5 million barrels a day, about 70% of its normal level of shipments. The final price refiners pay for Saudi oil may be different than the official list released by the state producer, with additional pipeline and logistics costs added if customers pick up crude from Yanbu on the Red Sea or from Sidi Kerir on the Mediterranean coast. Aramco increased prices for its Medium and Heavy crudes for sale to Asia next month, but the prices for those barrels are currently largely theoretical as they are usually shipped from the Persian Gulf. The company cut prices for all of its crude grades to the U.S., Northwest Europe, and the Mediterranean region.