Aramco cuts Arab Light price for Asia, USO falls

Saudi Aramco cut its price for Arab Light crude sold to Asian buyers to $5 a barrel below the regional benchmark, the lowest level in six years. Oil fell on the news, with WTI down 1.8% to $89.43 and Brent down 1.9% to $100.32.

The cut comes three days after the US Navy said it had reopened the Strait of Hormuz and that crude was flowing freely again. But transit through the strait has fallen 80% from its February level, and tanker traffic is running at about two vessels a day against a pre-conflict average of 125. UKMTO has recorded seven vessel strikes near the strait since September 28, including a projectile strike that set a tanker on fire and knocked out its power, at least the fourth such unexplained strike logged since mid-September. Iran's Revolutionary Guard Corps has warned ships against using the US-backed transit route.

Aramco's own chief executive, Amin Nasser, said days earlier that the loss of the east-west pipeline would have pushed Brent to $200 a barrel and warned that global supply was dangerously low. Aramco has separately been seeking new export routes and storage capacity after months of pipeline strain.

The price cut runs against the supply-crisis narrative that has surrounded the Hormuz standoff for months. A $5 discount at a six-year low points to Aramco competing for demand rather than rationing scarce barrels, and it lines up with the reported recovery in transit after weeks of tanker strikes and disputed reopening claims. The nearly 2% fall in both benchmarks suggests traders are treating the discount as a sign that physical supply is looser than the risk premium built into crude over the past month implied.