Saudi Arabia has slashed the price of its main crude grade for Asian buyers to the lowest level in five years, signalling persistent oversupply in global oil markets and growing pressure on producers.
According to a price list reviewed by Bloomberg, Saudi Aramco will cut the official selling price (OSP) of its flagship Arab Light crude to a 60-cent premium over the regional benchmark for January loadings. This marks the lowest pricing since January 2021.
The reduction is also larger than anticipated. A survey of refiners and traders had forecast a modest 30-cent per barrel price cut, but Aramco opted for a deeper adjustment in response to market conditions.
OPEC+ Holds Off on Production Increases
The latest pricing move comes just as OPEC and its allies (OPEC+) reaffirmed a decision over the weekend to pause production increases during the first quarter of next year. The alliance will later decide whether to continue unwinding output cuts as it attempts to reclaim lost market share.
OPEC+ is preparing for seasonally weaker winter demand across Asia, Europe, and North America, prompting a cautious approach to supply adjustments.
Global Oversupply Pressures Prices
Crude prices have fallen around 16% this year, weighed down by surging output from producers in the Americas along with additional supply from OPEC+ members themselves. This growth has outpaced relatively subdued global demand, reinforcing bearish sentiment across the market.
The International Energy Agency (IEA) has warned that the world may face a record oil glut in 2026, raising alarms across the industry. Major financial institutions, including Goldman Sachs, also forecast that crude futures are likely to drift lower in the near term.
In addition to oversupply, oil markets have had to navigate a complex mix of geopolitical tensions, trade disputes, ongoing wars, and sanctions — all of which have influenced supply chains and price volatility throughout the year.