Saudi Arabia Cuts Crude Oil Prices to Asia for 3rd Month in February 2026

Saudi Arabia Set to Reduce Crude Oil Prices to Asia for Third Consecutive Month Amid Oversupply

Saudi Arabia is poised to lower the Official Selling Price (OSP) of its crude oil for Asian buyers for a third consecutive month in February 2026, a move driven by a sustained global supply glut and tepid demand recovery. Market sources indicate this decision reflects ongoing pressure on benchmark prices, signaling Saudi Aramco's strategy to maintain competitiveness in its key market.

Expected Price Adjustments for February

Industry analysts and Asian refiners project that the flagship Arab Light crude grade will see its premium over the Oman/Dubai benchmark cut by approximately $0.10 to $0.30 per barrel. This would adjust its premium to a range of $0.30–$0.50, down from $0.60 in January—a level that was already the lowest in about five years.
Smaller adjustments are anticipated for other grades: Arab Extra Light may drop by $0.10–$0.20, while Arab Medium and Arab Heavy could see minor decreases or remain flat. These adjustments follow a softening in the Middle East spot market, reflecting wider global availability.

Key Drivers Behind the Price Cuts

Three primary factors are compelling Saudi Arabia's pricing strategy:

1. High OPEC+ Output: Despite a pause in planned increases for Q1 2026, the OPEC+ alliance had boosted production by nearly 2.9 million barrels per day through 2025, significantly adding to supply.

2. Robust Non-OPEC Supply: Producers outside the cartel, notably the United States, have sustained high output levels, further flooding the market.

3. Persistent Oversupply: The International Energy Agency (IEA) estimates a potential 2026 supply surplus of roughly 3.8 million barrels per day, creating sustained downward pressure on prices.

This confluence has resulted in ample inventories and stiff competition for buyers, leading Saudi Arabia to trim premiums tactically to secure its market share in Asia.

Market Impact and Asian Refiner Implications

For Asian refiners in China, Japan, and South Korea—major importers of Middle Eastern crude—lower OSPs directly reduce raw material costs. This can influence refining margins and may eventually affect regional fuel pricing. The price cuts also allow refiners to reassess their crude slate, potentially shifting demand between light and heavy grades based on configuration and product needs.

Saudi Arabia's monthly OSP announcements, typically around the fifth of each month, serve as a critical benchmark for the region, influencing pricing from other Gulf producers like Kuwait, Iraq, and Iran. A confirmed cut for February would reinforce a multi-month trend of declining premiums.

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Looking Ahead

Market watchers will monitor whether this oversupply dynamic persists, influenced by future OPEC+ policy decisions, non-OPEC production trends, and the pace of demand growth in major economies. Saudi Arabia's pricing actions remain a key barometer for the global oil market's direction, with the upcoming February pricing cycle expected to further reflect the current surplus-heavy environment.