Saudi Arabia's August crude oil prices for Asia expected to drop $6.5-8/barrel, hitting a four-month low
Taylor Wilson
A Reuters survey shows Saudi Aramco may slash its August official selling price (OSP) for Arab Light to Asia by $6.5–8/bbl, hitting a four-month low as a sharp selloff in Middle East spot markets and rising supply from multiple producers force Riyadh to compete on price.
How big is this price cut?
Arab Light's August OSP is expected to fall to $1.5–3/bbl above the Dubai/Oman average, down from a $9.5/bbl premium in July.
This means → the premium would be slashed by roughly two-thirds in a single month — the sharpest cut in recent memory.
Four industry sources contributed to the Reuters survey; other Saudi grades are expected to see matching reductions.
Why has the spot market weakened so fast?
Dubai spot-to-swap premium — how much spot crude costs over futures — fell to minus $1.64/bbl this week, a six-year low.
The month-to-date average sits at $3.06/bbl, down from $9.59/bbl in May — a nearly 70% drop in two months.
In plain terms = Asian spot buyers now have far more cheap alternatives available, and Saudi crude at high premiums simply isn't selling.
What changed on the supply side?
After a ceasefire deal, more tankers have resumed transit through the Strait of Hormuz, easing earlier supply-disruption fears.
The UAE, Iraq, and Qatar are actively placing cargoes on the spot market; Iran is also expected to expand exports after receiving a temporary US sanctions waiver.
West African, Brazilian, and US crude cargoes are trading at steep discounts globally, adding further competitive pressure on Saudi barrels.
Aramco last Friday also restarted loading operations at the Ras Tanura export terminal, which had been shut for nearly four months due to strait tensions.
How are Chinese buyers responding?
High Saudi prices had already visibly dampened Chinese demand — buyers sharply cut July liftings, and June nominations were also trimmed.
Buyers widely expect this deep price cut to revive purchasing interest, helping Saudi crude compete with alternative sources.
Two Asian buyers cautioned, however, that uncertain shipping conditions and geopolitical risks still make price forecasting difficult.
What does this mean for broader Middle East pricing?
Saudi OSPs are typically announced around the 5th of each month and serve as benchmarks for Iran, Kuwait, and Iraq, influencing roughly 9 million bbl/day of crude flows to Asia.
This reflects a reshaping of Middle East supply dynamics — more producers pumping, the strait reopened, rival crudes flooding in — forcing the pricing system back toward spot-market reality.
This means → how aggressively other producers follow Saudi's lead on price cuts will shape the purchasing map for Asian buyers in the second half of the year.
Content is for reference only, not financial advice.