File photo: Saudi and foreign investors stand in front of the logo of Saudi state oil giant Aramco during the 10th Global Competitiveness Forum in the capital Riyadh. Image Credit: AFP

Saudi Arabia lowered most of its oil prices for its main market of Asia in a sign of weakening with the global economic slowdown.

State-controlled Saudi Aramco cut the price of its key Arab Light grade for December sales to Asia by 40 cents to $5.45 a barrel above the regional benchmark. Refiners and traders predicted a drop of 35 cents, according to a Bloomberg survey.

Global recessionary fears and ongoing virus-related lockdowns in China have added to growth concerns, overshadowing worries over supply ahead of European Union sanctions on Russian crude shipments from December 5.

Asia's physical market weakened last month as China's oil buying came much later in the cycle than expected, while the head of the Organization of Petroleum Exporting Countries flagged an excess of supply in the fourth quarter.

Still, Aramco's official selling prices remain largely higher than previous years because of oil market tightness and the measures against Russia. The OPEC+ coalition also agreed to make a token reduction of 100,000 barrels a day, sparking fierce criticism from US President Joe Biden.

The kingdom kept the month-on-month pricing of all grades unchanged to the US, while raising them for its European buyers for most December-loading cargoes. For Asia, Arab Medium and Arab Heavy was reduced to the lowest in at least nine months.

Saudi Arabia sells most of its oil under long-term contracts to Asia, pricing for which is reviewed each month. China, Japan, South Korea and India are the biggest buyers.