Saudi Arabia unexpectedly cut its November crude oil prices for Asia to a six-year low on Monday, while simultaneously raising prices for Northwest Europe and the Mediterranean, according to a pricing document.

The largest crude exporter in the Middle East set the November official selling price (OSP) for Arab Light crude bound for Asia at a discount of $5 per barrel against the Oman/Dubai average, a reduction of $3 from the previous month and the widest discount since June 2020.

This price cut runs contrary to market expectations. The market had previously anticipated that the November OSP would be raised by as much as $5 per barrel, in line with the upward trend in Middle Eastern benchmark crude prices.

Saudi Aramco also lowered the November OSP for Arab Medium and Arab Heavy crude sold to Asia by $5 per barrel each.

People familiar with the matter said last week that Saudi Aramco had been considering offering discounts on crude loaded from Oman to compensate buyers for record-high freight costs. Saudi Aramco is seeking to protect its market share after exports were disrupted by the US-Israel war against Iran.

Three Asian refining industry sources said the OSP cut appears aimed at offsetting elevated freight costs for buyers. According to LSEG data, chartering a Very Large Crude Carrier (VLCC) capable of carrying 2 million barrels of crude from the Gulf to China was quoted at $1.2 million per day on a time-charter equivalent basis last Friday, compared with roughly $80,000 per day a year earlier.

Sources also said the lower OSP could offset the waiting time and longer voyage faced by Saudi oil exports from Egypt's Sidi Kerir port, where cargo loading has experienced delays. According to reports, since September, Saudi Aramco has sold millions of barrels of crude through ship-to-ship transfers outside the Strait of Hormuz, restoring oil flows through the strategic waterway to pre-conflict levels. Saudi Arabia has also resumed loading at the Red Sea port of Yanbu, after a brief suspension caused by a drone attack that shut down a key east-west pipeline.

Separately, Saudi Aramco raised the price of all crude grades sold to Northwest Europe for November by $3 per barrel. Prices for US buyers remained unchanged.