Saudi Arabia lowers September official selling prices for Asia to more than five-year lows, regional crude oil pricing influenced by Hormuz negotiations

⑴ The pricing document released by Saudi Aramco shows that the official selling price of Arab Light crude oil destined for Asia in September is set at a discount of approximately $2 per barrel to the Oman/Dubai average, marking the lowest level since June 2020. Last month, the discount was about $1.5 per barrel, representing the biggest cut in more than two decades at the time. ⑵ Market participants are simultaneously closely monitoring the progress of negotiations between Iran and Oman this week in search of signs of a potential reopening of the Strait of Hormuz. Brent crude oil futures have already fallen back to levels near those seen in mid-June when the US and Iran reached an interim agreement. ⑶ The official selling prices for Arab Medium and Arab Heavy crude oil in September were both raised by approximately $1.25 per barrel. Meanwhile, Saudi Aramco lowered official selling prices for Europe, the US, and the Mediterranean regions. The adjustments in price differentials across various grades and regions reflect differences in demand and competitive dynamics. ⑷ At the same time as announcing the official selling prices, Saudi Aramco requested that Asian clients submit their loading schedules for Ras Tanura by August 7, as well as alternative plans for loading at Yanbu or Sidi Kerir ports in the event of a strait closure. Only limited quantities of Arab Light crude are available at the two alternative ports. Further attention should be paid to the actual impact of the Strait of Hormuz agreement on Middle East spot premiums and the corresponding adjustments in purchase pace by Asian buyers.