The Kingdom is now pricing its flagship Arab Light grade at $1.50 per barrel below the Oman/Dubai benchmark. Such a deep discount is an anomaly, previously seen only during the intense market share battles of 2015 and the 2020 pandemic-era collapse. Despite these reductions, Saudi Arabia faces stiff competition from Iraq, Kuwait, and the UAE, who are leveraging their ability to ship from outside the Strait of Hormuz.

By utilizing ports like Sohar and Fujairah, these neighbors significantly reduce freight costs and insurance risks for Asian refiners. One trader noted that while Saudi oil remains trapped behind the high costs of loading at Ras Tanura, UAE grades like Upper Zakum are being offered at much steeper discounts. With China sitting on 1.3 billion barrels of stored crude and waiting for market stabilization, Middle Eastern exporters are effectively locked in a price war, forced to undercut each other to move their backlogged supply.