Saudi Aramco just took a machete to its Asian crude prices, cutting $6 per barrel from its July official selling prices. The move drops the premium for Arab Light crude to $9.50 over the Oman and Dubai benchmarks, down sharply from $15.50 in June.
What happened and why it matters
The price cut, announced around June 8, marks the second consecutive month of reductions from the Saudi state oil giant. Premiums for Saudi crude peaked around $19.50 to $20 per barrel in April and May, driven by supply fears as the US-Iran conflict disrupted shipping through the Strait of Hormuz.
The catalyst for the current reductions: a US-Iran memorandum of understanding announced in mid-June that includes provisions for reopening the Strait of Hormuz and easing sanctions. Roughly one-fifth of the world’s daily oil supply passes through the Strait. Oil prices dropped approximately 5% following the MOU announcement. Analysts now expect even sharper cuts to Saudi Arabia’s August official selling prices as supply conditions continue to improve.
Asian demand is cooling, and that changes the calculus
