Saudi Arabia has cut the January Arab Light crude oil official selling price to Asia to $0.60 a barrel above the Oman/Dubai average, its lowest level in five years, according to a pricing document reviewed by Reuters, amid growing signs of surplus in the oil market.

That marks a second monthly decline and the lowest since January 2021, Reuters data showed. The OSP premium for December was $1 a barrel.

The prices mirrored a downward trend in cash Dubai's premium to swaps, down to an average of 70 cents so far in December compared with an average of 90 cents in November.

The price cuts come against a backdrop of rising supplies in the market as the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, lift output.

Eight OPEC+ members have paused oil output hikes for the first quarter of 2026 after increasing their output targets by about 2.9 million barrels per day since April 2025.

Other producers, such as the U.S. and Brazil, are also increasing supply, adding to concerns of a glut. In its latest monthly outlook in November, OPEC changed its supply forecast to a surplus of just 20,000 bpd next year, according to Reuters calculations, versus its previous forecast of a sizeable deficit.

OPEC also lowered its 2026 demand forecast for OPEC+ crude by 100,000 bpd from the previous projection.

A cut in prices could spur additional Chinese buying, where independent refiners received the first batch of 2026 import quotas.

Saudi crude OSPs typically set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 million bpd of crude bound for Asia. Saudi term crude supplies to Asia are priced as a differential to the Oman/Dubai average: January December CHANGE SUPER LIGHT $2.15 $2.35 -$0.20 EXTRA LIGHT $1.10 $1.30 -$0.20 LIGHT $0.60 $1.00 -$0.40 MEDIUM -$0.55 $0.05 -$0.60 HEAVY -$1.90 -$1.30 -$0.60

(Reporting by Anushree Mukherjee, Anmol Choubey in Bengaluru and Siyi Liu in Singapore. Editing by Mark Potter)