Saudi Arabia cut price of its main crude grade effective August for Asian customers amid weakening demand and easing tensions. It’s the largest reduction in over two decades.The sharp price cut comes as pressure grows on the world’s largest crude exporter as softer demand in Asia coincides with improving supply conditions following the easing of geopolitical tensions in the Middle East.State-owned Saudi Aramco reduced the official selling price of its flagship Arab Light crude for Asian buyers by $11 per barrel for August deliveries, setting it at a $1.50 discount to the regional benchmark, according to a pricing document, cited by Bloomberg. The reduction was steeper than the $8-per-barrel cut expected by analysts surveyed by Bloomberg.Crude markets have retreated sharply from the highs seen during the recent Israel-Iran conflict. Prices eased after hostilities subsided and shipping through the Strait of Hormuz resumed, easing concerns over supply disruptions. Brent crude has since fallen to around $72 a barrel, reversing much of the war-related risk premium.At the same time, refiners in Asia are expected to receive more Middle Eastern crude as exports normalise. During the conflict, Saudi Aramco rerouted shipments from its Red Sea terminal at Yanbu after operations through the Persian Gulf were disrupted. With navigation through Hormuz returning to normal, exports from the kingdom’s primary Gulf facilities have recovered, increasing the availability of crude in the region.The supply outlook has also improved after the OPEC+ alliance agreed to raise production quotas for August. With Gulf producers once again able to export freely through Hormuz, countries including Saudi Arabia, Iraq and Kuwait are expected to increase output, adding to global supplies and intensifying competition for market share in Asia.
