In a significant move reflecting growing concerns over a supply glut, Saudi Arabia, a leading member of the Organisation of the Petroleum Exporting Countries (OPEC), has sharply reduced its official selling price for crude oil to Asia for January 2026. According to a Reuters report from Thursday, 4 December 2025, this reduction marks the lowest price point in five years.
Details of the Price Reduction
The news agency, citing official pricing documents, revealed that the January Arab Light crude oil official selling price (OSP) to Asia has been set at a premium of just $0.60 per barrel above the Oman/Dubai average. This represents a substantial drop from the December 2025 premium of $1 per barrel. The January 2026 price is now at its lowest level since January 2021, confirming a second consecutive monthly decline.
This pricing action aligns with a broader downward trend. The report indicated that the overall OSP premium for Dubai crude has also softened, averaging 70 cents in December 2025 compared to 90 cents in November 2025.
Market Forces Behind the Cut
The decision to slash prices comes against a backdrop of increasing oil supplies entering the global market. OPEC and its allies, a group led by Russia known as OPEC+, have been incrementally lifting their oil production. This has contributed to fears of an oversupply situation.
Interestingly, the report notes that eight OPEC member countries have decided to pause further increases in their oil output for the first quarter of 2026. This pause follows a period where the group had raised collective production targets by nearly 2.9 million barrels per day since April 2025.
Adding to the supply pressure, other major non-OPEC producers like the United States and Brazil are also ramping up their production, intensifying worries about excessive supply in the oil market.
Revised Forecasts and Potential Demand Boost
OPEC's own outlook has shifted to acknowledge the changing dynamics. In its November 2025 assessment, the intergovernmental organization revised its supply forecast for the coming year. Instead of predicting a significant deficit, OPEC now anticipates a much smaller surplus of approximately 20,000 barrels per day.
Concurrently, OPEC has also adjusted its demand forecast for 2026, lowering it by 100,000 barrels per day from its previous projection. However, the price cut could stimulate demand in a key market. The Reuters report highlighted that lower prices may encourage additional purchasing from China, where independent refiners have already received their first batch of import quotas for 2026.
This strategic price reduction by Saudi Arabia signals a competitive move to maintain market share in Asia, the world's top oil-importing region, while navigating a complex landscape of rising global supplies and moderated demand growth.
