Saudi Aramco has cut the official selling price (OSP) of its crude for December deliveries to Asia, a move that could benefit Indian refiners hunting for alternatives to sanctioned Russian supplies.
Aramco, the world’s biggest oil exporter, has reduced prices by $1.2-$1.4 per barrel across its major crude grades from November levels.
Its flagship Arab Light will now be sold to Asian customers at a $1-per-barrel premium to the Oman/Dubai benchmark in December. Prices for North American buyers were trimmed by $0.5 per barrel, while rates for Northwest Europe were left unchanged.
Aramco sets its OSP at the start of every month for the following month’s cargoes, quoting a premium or discount to benchmarks like Dubai or Brent. As Asia’s dominant supplier, its pricing decision effectively sets the tone for the region – other Middle Eastern producers usually follow, and refiners view OSP shifts as a window into Saudi Arabia’s assessment of supply-demand balance.
Lower Saudi prices are a clear invitation to Indian refiners replacing Russian cargoes, an industry executive said. Reliance Industries has already boosted Saudi purchases – imports from the Kingdom jumped 87 per cent month-on-month in October as it reduced dependence on Russia. The latest OSP cut could prompt Reliance and state-run refiners to book more cargoes.
Indian refiners need to replace nearly 1 million barrels per day of crude that previously came from Rosneft and Lukoil – Russia’s two biggest exporters, sanctioned by the US last month. Companies are now scouting additional barrels from the Middle East, Africa and the Americas.
The price cut also hints at a shift in Saudi Arabia’s market view. With concerns about a coming supply glut growing louder and Aramco ramping up production, the Kingdom appears focused on protecting market share, the executive said.
