Saudis cut oil prices to win over rivals
Saudi Arabia is reportedly cutting prices and courting new customers in Europe in the face of growing competition from fellow OPEC members.
Bloomberg says the kingdom cut official selling prices for all grades of crude to Northwest Europe and the Mediterranean Thursday. The decision follows the first sale in many years of Saudi crude to Polish and Swedish refiners that are typically buyers of Russian Urals.
This appears to be a new tactic by OPEC’s largest producer to respond to an increase in Iraqi shipments and Iran’s preparation to resume exports after sanctions against the country are lifted.
Bloomberg says Europe is gradually becoming the latest battleground for oil producers seeking to maintain market share amid a global oversupply.
Russia is expanding its own share of Asian markets that were typically dominated by Middle Eastern producers. Iran will intensify competition next year as it seeks to regain lost customers following a nuclear deal with world powers that will lift sanctions.
Iraq, the second-biggest producer in OPEC, is likely to keep selling more crude to Europe next year, while the total amount of oil the region’s refiners will process is likely to drop.
Once sanctions are lifted, Iran can boost oil exports by 500,000 barrels a day in a week and by 1 million a day within six months, Roknoddin Javadi, managing director of state-run National Iranian Oil Company, said last month.
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