Saudi Arabia, the world’s largest crude oil exporter, has cut all official selling prices for its crude sales to Asian and the United States clients in August, signalling mounting competition for Nigeria and others.
The country’s state-owned oil company, Saudi Aramco, lowered the pricing terms for Arab Light sold to Asia by the most in 10 months as refineries grapple with falling margins and oversupply.
The company said on Sunday that it would sell cargoes of Arab Light in September at $1.10 a barrel below Asia’s regional benchmark. That is a pricing cut of $1.30 from August, the biggest drop since November, according to data compiled by Bloomberg.
All other official selling prices for Asian clients were reduced. The biggest cut was by $1.60 for Extra Light crude. Pricing for Light and Extra Light grades for the US clients was cut by 20 cents and 40 cents, respectively, while the Medium and Heavy grades were unchanged. Aramco raised the pricing of all grades except Extra Light to northwest Europe and the Mediterranean.
The Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, said, in a telephone interview with our correspondent that Nigeria would have to offer discounts to be able to secure its market share, meaning lower revenue for the government.
He said, “Saudi Arabia is only reducing prices in places where it is still fighting for market share, because they are seeing higher production from Iran. There is no market share fight in Europe, whereas there is market share fight is Asia and the US.
“Lower prices just mean that Nigeria too will have to sell at a discount because the bulk of our oil is going to Asia and Europe. So, it means for us to be able to sell our crude oil, we have to offer massive discounts in Asia especially. It is not a good thing for Nigeria.”
Oni said whenever Saudi Arabia cut prices in the market, it would affect every crude globally.