New Delhi, July 6 -- Saudi Arabia cut the price of its main crude grade for customers in Asia in August by the most in at least 26 years, as a surge of global supply heightens competition for buyers.

State producer Saudi Aramco will lower the price of its Arab Light oil to Asia next month by $11 a barrel to a $1.50 discount over the regional benchmark, according to a price list seen by Bloomberg. It's a larger decline than the $8 drop expected in a Bloomberg survey.

Oil has plunged since the middle of June when the US and Iran reached an agreement to halt fighting and allow traffic to resume through the Strait of Hormuz, the key chokepoint that had been largely blocked since the start of hostilities. Brent crude has slumped to around $7...