• 3 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 9 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 11 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 11 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 3 days Texas Shutters More Coal-Fired Plants
  • 3 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 3 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 3 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 4 days Husky Energy Set To Restart Pipeline
  • 4 days Russia, Morocco Sign String Of Energy And Military Deals
  • 4 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 4 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 4 days India Needs Help To Boost Oil Production
  • 4 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 4 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 4 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 4 days District Judge Rules Dakota Access Can Continue Operating
  • 5 days Surprise Oil Inventory Build Shocks Markets
  • 5 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 5 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 5 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 5 days Oil M&A Deals Set To Rise
  • 5 days South Sudan Tightens Oil Industry Security
  • 6 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 6 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 6 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 6 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 6 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 6 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 6 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 6 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 7 days Kurdish Independence Could Spark Civil War
  • 7 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 7 days The Capital Of Coal Is Looking For Other Options
Natural Gas: Fading the Weather

Natural Gas: Fading the Weather

Recent news reports on warm…

Oil Prices Rise Amid Falling U.S. Rig Count

Oil Prices Rise Amid Falling U.S. Rig Count

Oil prices inched higher on…

Saudis Cut Oil Prices Again In Bid To Maintain Market Share

Saudi Arabia may have led the move to keep OPEC’s crude production high and thereby keep prices low, but that doesn’t mean it isn’t concerned about keeping its share of the global oil market.

Riyadh evidently demonstrated that on Dec. 4 when it dramatically cut oil prices for Asian and US customers. Saudi Aramco lowered the price of all its oil grades for Asian customers in January by between $1.50 and $1.90 per barrel below December prices. For US customers, prices for all grades will decline by between 10 cents and 90 cents.

At the same time, Saudi Aramco raised prices for all its grades of crude for clients in the Mediterranean and in northwestern Europe by between 20 cents and 50 cents per barrel.

Related: A Glimmer Of Hope In Current Oil Price Slide?

The Saudis haven’t explained their reasoning, and some analysts told Reuters that the pricing change is merely a reflection of the oil market. But others note Saudi Arabia has been cutting prices to certain customers, especially in the US, since before it steered the cartel to maintain production levels at the OPEC summit in Vienna on Nov. 27.

Now, with world oil prices falling daily – they’re down by nearly 40 percent since mid-June – some observers and some OPEC members believe the Saudis aim to maintain their market share, especially in the US. The American oil industry has been experiencing a domestic boom, but it’s predicated on expensive hydraulic fracturing. Cheap Saudi oil, they reason, could undercut that boom.

One analyst, Richard Mallinson of Energy Aspects, told the Reuters Global Oil Forum recently, “[The] Saudis are making it clear they don’t want to lose market share.”

Victor Shum, a vice president at the consultancy IHS Inc. in Singapore, agreed. “There’s no question that the Saudis want to maintain market share,” he told Bloomberg News. “They could cut prices to make them competitive in an environment that still seems to be under a lot of downward pressure.”

Analysts aside, even one OPEC oil minister, Bijan Namdar Zanganeh of Iran, agrees that Saudi Arabia is determined not to lose market share to the Americans.

Related: Oil Can Keep Crashing

At its Nov. 27 summit, OPEC voted to maintain production levels at 30 million barrels a day, a cap set nearly three years ago, despite the global oil glut. Poorer countries led by Venezuela had urged the cartel to cut production by at least 1 million barrels a day to keep prices from falling. But Saudi Arabia, OPEC’s largest and most influential producer, persuaded other members to keep production high.

Sources within OPEC told Reuters that during that meeting, Saudi Oil Minister Ali al-Naimi said the cartel should resist any erosion of its market share, and that cutting production would only play into the hands of rivals, including US companies.

These sources stressed, however, that al-Naimi didn’t say how much oil prices would have to fall before his country would agree to a cut in production.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News