Indonesia
Saudi Arabia Cuts Oil Prices for Asia: A Six-Year Low Amid Shipping Costs Surge
In an unexpected move, Saudi Arabia has reduced its oil prices for Asia to the lowest level in six years while raising prices for Europe, as shipping costs soar due to regional conflicts.
Saudi Arabia has unexpectedly reduced its official selling price (OSP) for crude oil sold to Asia for November 2026, setting it at $5 per barrel below the average prices of Oman and Dubai. This price cut, which amounts to a $3 decrease from the previous month, represents the largest discount since June 2020, according to reports from Reuters and CNBC Indonesia.
This decision contradicts market expectations, which had anticipated an increase of up to $5 per barrel for the OSP, in line with rising benchmark oil prices in the Middle East. Saudi Aramco, the state-owned oil company, also lowered the OSP for heavier crude oils, Arab Medium and Arab Heavy, by $5 per barrel for Asian buyers.
“The price cut represents the largest discount since June 2020.”Reuters
Sources familiar with the matter indicated that the price cuts were likely aimed at compensating buyers for soaring shipping costs. The cost of chartering a very large crude carrier (VLCC), capable of transporting around 2 million barrels of oil from the Gulf to China, has surged to approximately $1.2 million per day, a significant increase from about $80,000 per day a year earlier. This spike in shipping costs is attributed to disruptions caused by regional conflicts, including tensions related to the ongoing US-Israel conflict with Iran.
Three sources from Asian refining companies, who spoke on condition of anonymity, suggested that the OSP reductions were intended to alleviate the financial burden on buyers, who are facing increased logistics costs. One source noted that the lower selling prices could help offset longer waiting times and extended travel for Saudi oil exported through the Sidi Kerir port in Egypt, where loading delays have been reported.
In contrast to the price cuts for Asia, Saudi Aramco has increased the OSP for crude oil sold to Northwest Europe by $3 per barrel across all grades, following the resumption of exports from the Yanbu port on the Red Sea. Prices for buyers in the United States remained unchanged.
“The lower selling prices could help offset longer waiting times and extended travel for Saudi oil exported through the Sidi Kerir port.”Anonymous source, Asian refining company
On October 4, 2026, Saudi Arabia and other members of OPEC+ agreed to maintain stable oil production targets for November, aligning with market expectations that any further adjustments to production policies are unlikely until next year.
This pricing strategy reflects Saudi Arabia's efforts to retain its market share in Asia amid escalating shipping costs and regional geopolitical tensions that have significantly impacted oil export flows.