Saudi Arabia is the largest oil exporter in the world and it’s about to lower the price of its Arab Light benchmark crude for Asian consumers for the third month running. This follows a trend where spot prices are falling due to an abundance of supplies.
For February, it is expected that the official selling price (OSP), for Saudi Arabia’s Arab Light flagship crude will decrease.
Reuters’ survey of six Asia refining companies suggests a possible fall between 10 and 30 cents each barrel.
This adjustment will set the premium between 30 and 50 cents higher than the benchmark Oman/Dubai quotes.
The market is changing and the demand for goods in Asia has been refined.
The decline in January was 60 cents per barrel and already one of the lowest levels seen for five years. This would be the third monthly fall.
According to the most recent market survey, it is expected that in February, OSPs for Arab Extra Light Crude Oil will decrease.
The decline in oil prices is expected to range between 10 and 20 cents a barrel.
Market dynamics for heavier grades
The outlook is more stable for heavier grades such as Arab Medium and Arab Heavy.
According to the survey, the OSPs of both Arab Medium Crude and Arab Heavy Crude may remain the same or only experience a slight downward adjustment. This could be as little as 10 cents per barrel.
The differential in OSPs between crude grades is a reflection of the different supply-demand dynamics in Asia and the perceived premiums for quality in crude oil markets in the coming month.
Last week Cash Dubai saw its premium on swaps at the spot market rise, after a drop since October. This was attributed to abundant supplies.
The average premium per barrel has decreased to 61 cents this month from the 88-cent average in November.
This average premium is also now less than half the amount recorded in October. It highlights the volatility of recent months and the downward trend since its high.
Global Supply Pressures and OPEC+ Action
Oil prices fell as a result of the increased crude oil supply in the world.
The two main sources of this surge in production are:
Firstly, the Organization of the Petroleum Exporting Countries (OPEC+) and its partners, collectively known by the acronym OPEC+ have deliberately increased their production.
Often, this strategy is used to respond to market growth or to balance out the market.
Second, there were significant increases in production outside the OPEC+ Alliance, most notably the US.
The combined increase in production from the two major producers flooded the markets, causing prices to fall due to an excess of supply relative to demand.
OPEC+ temporarily halted the increase in oil production during the first quarter 2026.
The decision was made after eight countries released approximately 2.9 millions barrels of oil per day on the market since April 2025.
The International Energy Agency has released its most recent oil market report. According to this, in 2026 the global oil supply will exceed the demand by 3,84 million barrels every day.
The disruptions in Venezuelan oil supply have only had a small impact on Middle East markets, since the Latin American supplier accounts for less than 1% of the global market.
The majority of crude oil is exported to independent, smaller refineries in China.
Saudi Aramco determines crude oil prices by analyzing customer feedback and the change of value in its oil each month, calculated on the basis of product yields and prices.
Saudi Arabian crude oil OSPs are released on the 5th of every month and influence prices for Iranian, Kuwaiti and Iraqi crude oil.
The collective price affects roughly 9 million barrels of crude oil per day (bpd), destined for Asia.
As new information becomes available, this post Saudi Arabia to reduce February crude price for Asia amid glut of supply may be updated.
