Cheaper US crude is luring more Asian buyers and undercutting the Middle East's oil producers as competition between exporters heats up

Demand for Middle Eastern oil is waning as Asian buyers switch to cheap US crude.

Sources with knowledge of the matter told the outlet that South Korean and Indian oil companies have bought 16 million barrels of US crude on the physical spot market this month. In July, the amount of oil purchased was double.

The main US export grade is trading at a premium of less than $8 a barrel over the benchmark for crude due to arrive in November. The more attractive US crude will be to Asian buyers.

November WTI futures are trading at a discount of nearly $4.50 a barrel to Murban futures, which are backed by the United Arab Emirates' flagship blend.

Competition between producers in the two regions is heating up as the US is now the world's largest producer.

As the West scrambles to replace Russian supply after the invasion of Ukraine, the US has increased crude production. According to the Energy Information Administration, US crude-oil exports hit a record high in July.

Saudi Arabia raised its oil prices for Asian buyers in August due to a tighter oil market and high demand.

The demand seems to be cooling. Saudi Aramco has allocated full contract volumes of crude to at least 4 North Asian buyers for the last two months, suggesting that any squeeze on supply in the market could be easing.