Saudi Arabia, the world’s largest oil exporter, could price Arab Light crude for Asian buyers at a discount for the first time since December 2020. According to a study, the official selling price (OSP) for March could fall by between 50 and 85 cents per barrel, which would represent a discount of between 20 and 55 cents below the average Omani and Dubai quotations.
A new opportunity for a new light crude oil price
This change would reflect a fourth consecutive monthly decline in Saudi PSOs, following a decrease of 30 cents per barrel for February. In addition, prices of other Saudi crude oil grades, such as Arab Extra Light, Arab Medium and Arab Heavy, are also expected to experience similar cuts.
The price cuts are the result of a change in the structure of the Dubai market, which has moved into contango, where prices of future supplies are higher than those of immediate cargoes. The situation suggests lower demand for crude oil in the near term. Cash Dubai’s spread with swaps has averaged -29 cents per barrel during January, which marks a decrease from the 62-cent premium recorded in December.
However, some analysts suggest that price cuts for March could be lower than expected due to a rebound in demand for Saudi crude in Asia. In particular, Indian refiners are replacing Russian oil with Middle Eastern crude.
Global oil supply has outstripped demand, mainly because OPEC+ began increasing production in April 2025, after years of cuts. Other producing countries such as the United States, Guyana and Brazil have also increased production. However, eight OPEC+ members have paused production increases for the first quarter of 2026, having released 2.9 million barrels per day to the market since April 2025.
The International Energy Agency (IEA) forecast that global oil supply will exceed demand by 4.25 million barrels per day during the first quarter of 2026. Saudi crude oil prices (OSP) are closely followed by other oil producing countries such as Iran, Kuwait and Iraq, affecting some 9 million barrels per day destined for Asia.
Source: Reuters
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