RIYADH: Under pressure from Russian, Iraqi and Iranian oil exports, Saudi Arabia discounted its crude last weekend to maintain its share of big Asian markets. The price cut, which applies to September purchases, comes after two years of high-volume pumping by Saudi Arabia, the world’s largest oil producer. The kingdom had chosen to feed an oil glut and see prices drop rather than sacrifice sales to international rivals. But in Asia — the main source of oil-demand growth recently — Saudi Arabia has continued to lose ground. Last Sunday, it dropped its prices for Asian customers by between US70c and $US1.30 a barrel (depending on the grade of oil), helping drive the global crude price below $US42 a barrel.
That was the deepest price cut since October last year. “The cuts were done to make sure Saudi Arabia remains competitive against sellers from the Middle East and Europe,” a source said. Iraq’s Indian market share leapfrogged Saudi Arabia’s in this year’s second quarter. Iraq sold 11 million tonnes of oil to India in the quarter, a million more than Saudi Arabia, according to India’s oil ministry. That marks a reversal from last year, when Saudi Arabia’s India exports surpassed Iraq’s by 900,000 tonnes on a quarterly average. The shift reflects a boost in Iraqi production from new projects coming online.
Iraq’s output in June was up 200,000 barrels a day from a year earlier, to 4.21 million barrels a day. In China, Saudi Arabian oil is losing ground to Russian exports that are feeding China’s burgeoning independent refineries.
