Saudi Arabia has slashed prices on Sunday for its November oil sales to Asia and the U.S. as the largest crude exporter in the world looks to keep its prices competitive amid an OPEC (Organization of the Petroleum Exporting Countries) price war between rival Gulf suppliers.
The move by Saudi Arabia comes as Iran, Iraq, and other Middle Eastern countries made deeper cuts in their official oil prices than Saudi Arabia did in September and comes as U.S. production continues to increase, despite lower global oil prices. This has members of OPEC in the midst of a price war as they battle to retain their share of the last growing markets in Asia amid a global glut and weakened demand.
Saudi Aramco, the nation’s state-owned oil company, has cut its official price for Medium grade crude to Asia next month to a discount of $3.20 per barrel below the regional benchmark, compared with a $1.30 discount for October sales, Bloomberg reports, citing an emailed statement from the company on Sunday.
Its discount for Medium grade to Asia, which is the main market for Saudi crude, has widened the most since February 2012, when the company cut prices by $2 per barrel, according to Bloomberg.
Brent crude, a global benchmark, has tumbled 48 percent in the past 12 months as Saudi Arabia and other OPEC members opted to protect market share versus cutting output to boost prices. The price of Brent has plunged from over $100 per barrel in July 2014 to less than half that amount six months later and traded below $50 per barrel on average in September.
OPEC decided in December and again in June to keep its production target unchanged at 30 million barrels per day, however the oil cartel has exceeded this official target every single month since May 2014, Bloomberg notes.
Saudi Arabia boosted its output to a record 10.48 million barrels a day in June, according to the International Energy Agency (IEA).