Saudi Aramco Slashes Oil Prices After US-Iran Deal

State producer Saudi Aramco reduced the August official selling price of its Arab Light crude for Asian customers by $11 per barrel, marking the largest reduction in at least 26 years. The price was set at a $1.50 discount over the Oman and Dubai regional benchmark, a sharp reversal from the previous month's $9.50 premium. This pricing adjustment, the lowest since June 2020, follows a mid-June peace agreement between the United States and Iran that halted hostilities and reopened the Strait of Hormuz.

During the conflict, the Strait of Hormuz was largely blocked, forcing Aramco to divert exports to its Yanbu facility on the Red Sea. With the blockade lifted and a 60-day sanctions waiver allowing Iranian oil to return to the market, global supply has surged and Brent crude prices have fallen to approximately $72 per barrel. To further stabilize markets, OPEC+—led by Saudi Arabia and Russia—approved a production increase of 188,000 barrels per day starting in August.

Despite the record cuts, Saudi Arabia faces a price war with other Gulf producers. The Abu Dhabi National Oil Company, Iraq's Somo, and Kuwait Petroleum are offering deeper discounts to attract buyers, particularly in China. The United Arab Emirates, which withdrew from OPEC+ in May, is aggressively discounting its crude as it aims to increase production capacity to 5 million barrels per day.