SINGAPORE: Top oil exporter Saudi Arabia has cut the October price for flagship Arab light crude to Asia to the lowest in nearly three years on concerns of weak demand in the region.

The October official selling price (OSP) for Arab Light fell by 70 cents to $1.30 a barrel above the Oman/Dubai average, Saudi Aramco said in a statement late on Friday, the lowest since November 2021.

The drop is at the deeper end of expectations, as three of five sources at Asian refineries had said the price was expected to fall between 50 cents and 70 cents a barrel in a Reuters’ survey.

The price cuts came during a week of sharp declines in global crude futures with Brent falling to its lowest since December 2021.

A source at an Asian refinery said the cut was deeper than what he had expected, adding that there was ample supply in the market.

The October OSP for Arab Heavy crude for Asia had a deeper reduction of $1.00 a barrel, with demand set to taper off following the conclusion of peak summer fuel oil consumption, while Middle East producers are facing increasing competition from Canadian exports from the expanded Trans Mountain pipeline (TMX).

Rising supplies of diesel and gasoline have also pummelled Asian refiners’ margins to their lowest seasonal levels since 2020 after peak summer travel demand ended.

The price cut for Asia, which makes up around 80% of Saudi Arabia’s oil exports, follows reports that OPEC+ has agreed to delay a planned oil output increase for October and November.

This decision comes after crude prices hit a nine-month low, with the group also indicating it may further pause or even reverse the hikes if necessary.

Meanwhile, Saudi Arabia cut prices for other regions, with reductions of 80 cents a barrel across all of its crude grades for Northwest Europe and the Mediterranean. Saudi term crude supplies to Asia are priced as a differential to the Oman/Dubai.