Saudi Arabia, through state-run oil giant Aramco, has reduced its official selling prices (OSPs) for crude oil exports to Asia, reflecting weaker demand in the region and an effort to maintain market competitiveness. The price cuts are the lowest in four years, with some signs of demand recovery, especially from China.

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• Saudi Aramco has lowered crude oil prices for January cargoes.
• The premium for Arab Light crude is now $0.90 per barrel above Oman/Dubai average, down from $1.70 for December.
• This is the lowest premium for Arab Light since January 2021, when demand was affected by COVID-19.
• Asian demand in 2024 is expected to decline compared to 2023.
• However, November saw a rise in imports, with China leading the charge.
• Saudi Arabia’s market share in Asia increased recently, rising from 16.7% in August to 21.0% in November.
• Saudi Aramco’s price cut may aim to maintain competitiveness against Brent-priced crudes.
• Brent’s premium over Dubai crude has been narrowing, making Brent cheaper relative to Middle Eastern crude.
• Saudi Arabia is trying to keep its oil competitive against West African oil.
• The OSP cut may also be due to a stronger U.S. dollar, affecting local currency pricing.