Saudi Arabia slashes January oil prices for Asia, US

Saudi Arabia slashes January oil prices for Asia, US
Saudi Arabia

LONDON - Saudi Arabia slashed its oil prices for Asian and US buyers on Thursday, in a move some analysts said shows it is stepping up its battle for market share a week after refusing to support OPEC output cuts.

Official Selling Prices (OSPs) for oil from the largest producer and exporter in the Organisation of the Petroleum Exporting Countries have been seen as possible indications of the kingdom's oil policies.

Some analysts have said sharp drops in OSPs in recent months show the kingdom is fighting for market share with other producers, but others have said the OSPs only reflect the market and are a backward-looking rather than a forward-looking indicator.

The discounts on Saudi crude oil for Asian customers in January were the biggest since at least 2002, according to Reuters data, while prices were cut to the United States for the fifth month in a row.

"(The) Saudis are making it clear they don't want to lose market share," Richard Mallinson, an analyst at consultancy Energy Aspects, told the Reuters Global Oil Forum.

Saudi Arabia and other rich Gulf producers last week blocked proposals from poorer OPEC members, such as Venezuela and Algeria, to cut output to support oil prices, which have plummeted by over a third since June.

OPEC sources have said Saudi Oil Minister Ali al-Naimi told the OPEC ministerial meeting behind closed doors that OPEC should defend its market share, because production cuts would only boost rival producers, including US shale oil companies.

According to the sources, Naimi did not give any indication how far prices would need to fall for Saudi Arabia to consider cutting production.

Oil prices have been volatile since the OPEC meeting and are down around 40 per cent since June. On Thursday, Brent crude fell, trading below $70 per barrel.

Aramco cut the January price for its Arab Light grade for Asian customers by $1.90 a barrel from December to a discount of $2 a barrel to the Oman/Dubai average.

The Arab Light OSP to the United States was set at a premium of $0.90 a barrel to the Argus Sour Crude Index (ASCI) for January, down 70 cents from the previous month.

Arab Light OSPs to Northwest Europe were raised by 20 cents for January from the previous month to a discount of $3.15 a barrel to the Brent Weighted Average

 

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