Saudi Arabia, the world’s top oil exporter, is likely to cut crude prices for Asian buyers in January to their lowest levels in years, according to traders. The January official selling price (OSP) for Arab Light could drop by 70 to 90 cents per barrel from December, marking at least a four-year low, a Reuters survey of six Asian refinery sources revealed.
“The weaker Middle East benchmark prices in November are driving the cuts,” said traders. Despite TotalEnergies purchasing 15.5 million barrels of crude in the S&P Global Platts window, the gap between front and third-month Dubai prices narrowed by 86 cents last month, reducing the backwardation spread. (Backwardation is when near-term prices exceed future prices.)
Spot premiums for January-loading Middle East grades also halved from the previous month due to weak demand. Similarly, Arab Extra Light’s OSP is expected to follow Arab Light’s drop, while heavier grades like Arab Medium and Arab Heavy may see steeper price reductions as fuel oil margins continue to decline.
“Chinese refining margins remain poor, and we’re hoping for larger price cuts for heavy grades,” one respondent added.
Traders also noted that the upcoming OPEC+ meeting on December 5 could influence supply in early 2025 and potentially impact Saudi Aramco’s pricing decisions. Many expect the state oil giant to announce January prices only after the meeting.
