Saudi Aramco considering discounts for Oman STS crude to counter high freight rates, sources say

By Nidhi Verma and Siyi Liu NEW DELHI/SINGAPORE, Sept 28 (Reuters) — Saudi Aramco is considering offering discounts on its official selling prices (OSPs) for oil loaded off Oman to compensate buyers for record freight rates, five people familiar with the matter said. The move could help Aramco regain some of the market share it has lost due to disruptions to oil shipments through the Strait of Hormuz. Saudi oil supplies have slowed since the Iran war effectively blocked the strait, while United Arab Emirates state-run Abu Dhabi National Oil Co has significantly increased sales by transporting crude from fields west of the key waterway to export terminals outside the Strait. Aramco is in discussions with some Asian refiners about possible discounts to its OSPs to make its crude more attractive amid soaring freight rates, said the people, speaking on condition of anonymity as the talks are private. The discounts could apply to cargoes offered this week for second-half October loading for sale via ship-to-ship transfers off Oman. One of the sources said the discount under discussion was around $9 a barrel. In recent weeks, Aramco has sold crude to Asian buyers at premiums of $10-$20 a barrel over its monthly OSPs for loading off Oman, outside the Strait of Hormuz, as the kingdom increased volumes exported from fields inside the Gulf, the sources said. Saudi Aramco declined to comment. Crude oil exports through the Strait of Hormuz are set to reach about 7.4 million barrels per day this month, as Saudi Arabia diverted exports from its Red Sea port of Yanbu after drone attacks damaged its East-West pipeline, preliminary data from ship-tracking firm Kpler showed. The kingdom has blamed Iraq militia for the attack. This is not the first time Saudi Arabia has sought to help Asian refiners offset higher freight costs. In recent months, before the damage to the East-West pipeline, Saudi Arabia offered customers the option of paying for its oil based on the OSP for the month of arrival rather than the month of loading, to offset higher freight costs for longer voyages via the Sidi Kerir terminal, the sources said. (Reporting by Nidhi Verma in New Delhi; Siyi Liu, Florence Tan in Singapore; Editing by Emelia Sithole-Matarise) ((mailto:siyi.liu@thomsonreuters.com;)