(The views expressed here are those of the author, a columnist for Reuters.)

LAUNCESTON, Australia - The decision by Saudi Aramco to cut the price of its crude oil for Asian refiners for December cargoes has been viewed as a move to build market share amid concerns of looming global oversupply.

But the reduction was at the lower end of forecasts by Asian refiners and seems more of a move to keep Saudi oil just competitive enough against other grades, while also giving the world’s biggest crude exporter flexibility should China and India shun Russian barrels amid U.S. sanctions.

Aramco last week lowered its official selling price (OSP) for its benchmark Arab Light grade for Asian customers to a premium of $1 a barrel over the Oman/Dubai average for December-loading cargoes.

This was down $1.20 a barrel from a premium of $2.20 for November-loading crude and takes the OSP to the lowest level in 11 months.

However, the reduction in the OSP was expected by Asia’s refiners, who buy about 80% of Aramco’s seaborne exports.

Asian refiners forecast that Aramco would drop the OSP for Arab Light by between $1.20 and $1.50 a barrel in a survey conducted by Reuters ahead of the announcement.

This means the actual reduction was at the lower end of expectations, a move that doesn’t really fit with a market narrative that the Saudis are slashing oil prices in order to build market share.

Rather, the lower OSP reflects Aramco’s long-standing practice of following the current market dynamics in setting prices.

The premium of cash Dubai crude to swaps has been trending lower in recent weeks, averaging $1.12 a barrel so far this month, down from $1.73 in September.

The price of global benchmark Brent crude over Dubai has also been trending lower, with the exchange for swaps dropping to a rare discount last week.

Brent’s discount to Middle East benchmark Dubai widened to 26 cents a barrel on Monday, the most in more than five years and down from a premium of $3.77 a barrel as recently as June 19.

What this means is that crude grades that are priced against Brent are becoming relatively cheaper compared with those priced against Dubai.

Crudes that are priced against Brent include grades from West Africa, Latin America and even U.S. grades, given West Texas Intermediate Midland is deliverable into the Brent benchmark.

In effect, what Aramco is doing with the cut to its December OSP is ensuring that its crude remains competitive against other grades.

This means that Saudi crude will remain in the mix when Asian refiners are deciding what they need for December and January processing.

RUSSIAN UNCERTAINTY

It also means that Aramco can take advantage of any reduction in the supply of Russian crude, which has been hit by new sanctions by U.S. President Donald Trump.

Some refiners in the main buyers of Russian crude, China and India, have been reported to be looking for alternative supplies.

There is some evidence of this happening in top crude importer China, with commodity analysts Kpler estimating November seaborne imports from Russia will drop to around 926,000 barrels per day (bpd) from 1.45 million bpd in October.

At the same time China’s imports of Saudi crude are on track to rise to 1.78 million bpd in November from 1.20 million bpd in October.

However, Asia’s second-biggest oil importer, India, is expected to receive about 589,000 bpd of Saudi crude in November, down from 691,000 bpd in October, according to Kpler estimates.

India is still buying Russian crude, with 2.26 million bpd expected to land in November, up from 1.70 million bpd in October.

However, India’s purchases of Russian oil may start to ease from December onwards if its refiners are genuine in their stated commitment to buy less.

With uncertainty over how much Russian crude will be bought by China and India, it seems that Aramco has positioned to take advantage of any gaps in supply by making more crude available at prices that are at least competitive with other grades.

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The views expressed here are those of the author, a columnist for Reuters.

(Editing by Sonali Paul)