Saudi Arabia continues its plan to protect market share
Saudi Arabia today cut prices of its oil to customers in major markets including Europe, Asia and the Mediterranean in the hopes of defending its market share. The move is seen as a reaction to Iran’s return to global oil markets.
Saudi Arabia discounted even its best-quality crude, similar in quality to what Iran sold in Europe prior to sanctions, in order to continue defending market share, according to The Wall Street Journal.
Saudi Aramco, the state-owned oil giant, lowered its official price point for Arab Light crude to Asia by $0.20 per barrel, and $0.40 per barrel for Arab Extra Light, to customers in Asia, according to Bloomberg. For Mediterranean customers, prices for extra light, light and medium will be decreased by $0.75, $0.30 and $0.20 per barrel, respectively, reported The Wall Street Journal.
Europe saw the price of extra light and light grades decreased by $0.30 and $0.10, respectively, while medium and heavy were increased by $0.40 and $0.80 per barrel each. U.S. prices remain largely unchanged, with light crude down $0.20 and medium up $0.10 per barrel.
Aramco’s decision to make its crude oil more attractive to buyers in major markets seems to signal the kingdom has little intention of changing the course of OPEC policy.
The Saudi pricing “reflects they will carry on as they are,” said John Hall, chairman of Alfa Energy. “The Saudis will not cut” production.
Other OPEC members such as Venezuela are pushing both within and outside OPEC for oil producing nations to cut production and lift prices. Rumors that OPEC might meet with Russia and other non-members to discuss coordinated cuts helped to fuel an oil price rally this week, but so far no evidence has surfaced that such a deal will take place.
“The chances of an emergency meeting are remote,” a Gulf oil official said. “Gulf countries still see no need for a meeting, especially without a firm plan that everyone agrees on.”
Brent crude oil closed at $34.71 Thursday, WTI at $31.69.