July 9 (Bloomberg) -- Saudi Aramco, the world’s largest state-owned oil company, deepened cuts in supplies of its Arab Heavy and Medium oil grades sold under term contracts to Asia in August, refinery officials said.

The oil company will reduce overall supplies, which include the Light and Extra Light grades, by as much as 20 percent from contractual volumes, according to a survey of officials at refineries in Japan, Singapore and South Korea.

Saudi Aramco had reduced supplies by about 15 percent for July. The global recession prompted consumers to cut back on travel, limiting gasoline consumption and diesel demand.

The company lowered August prices for the Heavy and Medium grades while raising prices for the Light, Extra Light and Super Light types. Saudi Arabia has a quota to produce 8.051 million barrels a day after production cuts announced by the Organization of Petroleum Exporting Countries.

The oil producer’s officials in Dharan, Saudi Arabia, weren’t available for comment. A Chinese processing official said their shipments were left unchanged after requesting for less oil in August.

Refiners have been seeking more of the heavy types of crude oil because of the higher yield of fuel oil after processing. Fuel oil’s discount to the price of Dubai crude, a Persian Gulf benchmark for Asian refiners, narrowed to $4.35 a barrel today from $6.18 a month ago.

Aramco lowered its official selling price for Arab Heavy sold in August by 30 cents to a discount of 45 cents a barrel to the average of Persian Gulf benchmarks Oman and Dubai. Medium declined 30 cents to a premium of 30 cents a barrel to Oman and Dubai.

Arab Light climbed 10 cents to a premium of $1.50 a barrel to the Oman and Dubai average while Extra Light increased 20 cents to a premium of $1.90 a barrel.

To contact the reporters on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net.

Last Updated: July 9, 2009 01:38 EDT