• 6 minutes WTI @ 67.50, charts show $62.50 next
  • 11 minutes Saudi Fund Wants to Take Tesla Private?
  • 17 minutes Why hydrogen economics is does not work
  • 2 hours Starvation, horror in Venezuela
  • 1 hour The EU Loses The Principles On Which It Was Built
  • 22 mins Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 1 hour Crude Price going to $62.50
  • 17 hours Anyone Worried About the Lira Dragging EVERYTHING Else Down?
  • 1 hour WSJ *still* refuses to acknowledge U.S. Shale Oil industry's horrible economics and debts
  • 11 hours Chinese EV Startup Nio Files for $1.8 billion IPO
  • 22 hours Oil prices---Tug of War: Sanctions vs. Trade War
  • 22 hours Correlation does not equal causation, but they do tend to tango on occasion
  • 22 hours Russia retaliate: Our Response to U.S. Sanctions Will Be Precise And Painful
  • 1 day California Solar Mandate Based on False Facts
  • 1 day WTI @ 69.33 headed for $70s - $80s end of August
  • 24 hours Monsanto hit by $289 Million for cancerous weedkiller
What Would A Hard Brexit Mean For British Oil?

What Would A Hard Brexit Mean For British Oil?

Despite nearly 14 months of…

Is This The Next Natural Gas Giant?

Is This The Next Natural Gas Giant?

Nigeria has long been renowned…

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