Aramco Cuts Oil Prices to Lowest Level in 5 Years

Saudi Arabia has sharply reduced the price of its flagship crude oil for Asian buyers, marking the biggest monthly cut in at least 25 years as increased supplies returning through the Strait of Hormuz intensified competition in the global oil market.

State owned oil giant Saudi Aramco lowered the official selling price of its Arab Light crude for August deliveries by $11 per barrel, setting it at $1.50 below the regional benchmark for Asia. The move brings the pricing differential to its lowest level since 2020 and represents the largest monthly reduction since at least 2000.

The price cut follows an interim United States Iran peace agreement that allowed oil shipments stranded by regional tensions to resume moving through the Strait of Hormuz, one of the world’s busiest energy shipping routes. The increase in available crude has intensified competition among producers seeking buyers, particularly in Asia.

Oil analyst Ahmed Mehdi of Renaissance Energy Advisors said the reduction reflects an oversupply of prompt cargoes rather than the start of a market share battle. He said the move was driven by the normalization of shipping through the Strait of Hormuz after recent disruptions.

Despite the sharp reduction in Saudi oil prices, global crude prices traded in a mixed range as stronger demand for refined petroleum products offset some of the downward pressure.

Saudi Arabia has previously used price cuts and production adjustments to manage market conditions and is currently increasing output gradually under agreements reached by the OPEC+ alliance.