Crude Oil Under Pressure as Saudi Aramco Cuts Prices

Core Insights - Crude oil prices are experiencing downward pressure due to demand concerns, with Saudi Arabia lowering its main crude grade price to Asia for December delivery to the lowest level in 11 months, indicating weakened energy demand [2][3] - Gasoline prices are rising due to tight supplies, as gasoline inventories have fallen to an 11-year low, while a weaker dollar is limiting losses in crude oil [2][3] Crude Oil Market Dynamics - Saudi Arabia's Aramco has cut the price of Arab light crude by $1.20 per barrel, signaling bearish sentiment for oil prices [3] - The crude crack spread has risen to a 1.5-year high, encouraging refiners to increase crude purchases for gasoline and distillate production [3] Geopolitical Factors - Reports of potential US military strikes on Venezuela, the world's 12th largest oil producer, are providing some support for oil prices [4] OPEC+ Production Strategy - OPEC+ plans to increase production by 137,000 barrels per day (bpd) for December but will pause further increases in Q1 2026 due to an emerging global oil surplus [5] - The International Energy Agency (IEA) forecasts a record global oil surplus of 4.0 million bpd for 2026, with OPEC+ aiming to restore a total of 2.2 million bpd production cut made in early 2024 [5] Russian Oil Export Challenges - Reduced crude exports from Russia are supportive of oil prices, as Ukraine's attacks on Russian refineries have limited export capabilities [6] - Ukrainian actions have led to a decrease in Russia's total seaborne fuel shipments to 1.88 million bpd, the lowest in over 3.25 years, and have significantly impacted refining capacity [6]