Oil War Comes to Europe

Oil War Comes to Europe

With oil exports to Europe having slipped from 13% of Saudi's total to just 10% in the last six months, the de facto leader of OPEC has slashed its Official Selling Price to Europe in an effort to regain market share.
Saudi Arabia lowered its OSP for its Arab light crude grade in Europe by $1.30 a barrel for December, taking its discount to the weighted average of the North Sea Brent benchmark to $4.75 a barrel, the largest discount since February 2009, Oil Price reported.
The move is basically going after Russia's customer base and has raised heckles in Moscow, with Rosneft CEO Igor Sechin complaining last month about Saudi "dumping" after he revealed the kingdom was selling oil to refineries in Poland.
Saudi Arabia, which produces more than one in every 10 barrels of oil in the world, has been squeezed in Europe over the past year as rival producers have sent more oil to the region.
Europe is becoming the battleground for oil producers seeking to maintain market share amid a global oversupply. Russia has protested Saudi sales to northern Europe, while also expanding its own share of Asian markets that were typically dominated by Middle Eastern producers.
Rising shipments from Iraqi Kurdistan that are delivered into the Mediterranean via the Turkish port of Ceyhan have displaced some Saudi shipments this year, traders and analysts said, while more crude from West Africa is also flowing to Europe.
The kingdom has responded by trying to find new customers, including targeting refineries that have traditionally taken the majority of their supplies from Russia and the North Sea.
The global oil market remains oversupplied by at least 1 million barrels a day, a move exacerbated by both Saudi Arabia and Iraq raising production since OPEC decided last year to focus on squeezing out higher cost producers rather than defending price.
“If Saudi Arabia and Iraq went back to producing what they were before last November’s OPEC meeting, the market would now be in a deficit,” said Paul Horsnell, head of commodities research at Standard Chartered. “The policy can’t be characterized solely as a market share battle. Anything coming into the Mediterranean competes first with Russian and Iraqi crude.”
Russia’s oil output has also risen to post-Soviet era highs in 2015, despite crude prices more than halving to less than $50 a barrel since summer 2014. Russia is also sending more crude into Asia via its Eastern Siberia Pacific Ocean pipeline, increasing competition in those markets.
“ESPO has taken a fair share of Saudi’s market share as well,” one trader said. Meanwhile, Iran is planning to boost oil exports by 500,000 barrels a day in a week and by 1 million a day within six months, Rokneddin Javadi, managing director of state-run National Iranian Oil Company, said last month.
Before the European Union banned member states from buying Iranian oil in 2012, the region’s imports from the Middle Eastern nation were just below 600,000 barrels a day, according to the Paris-based IEA.

Short URL : http://goo.gl/7RgJe2
  1. http://goo.gl/9ykgcj
  • http://goo.gl/iRBvFY
  • http://goo.gl/c5uvJl
  • http://goo.gl/hNI4Pf
  • http://goo.gl/uGOikp

You can also read ...

China Rejects US Sanctions, Vows to Continue Iran Crude Purchase
As the US and Iran continue to trade barbs over the...
India Vying for US Waiver
India, the second biggest crude customer of Iran, may cut its...
Venezuela Braces for Pricey Gasoline
Gasoline prices in Venezuela will soon catch up with world...
Zanganeh to Attend OPEC, Non-OPEC Committee Meeting
Iran's Oil Minister Bijan Namdar Zanganeh will attend a...
S. Korea Iran Crude Imports Up 15%
South Korea’s imports of Iranian crude rose around 15% in July...
Indonesia Cuts Oil Imports
Indonesia’s PT Pertamina will get an extra 225,000 barrels per...
UK's Quercus Halts Iran Renewable Project
British renewable energy investor Quercus said it will halt...
NPC Not Worried About Exports
The National Petrochemical Company is not concerned about...