Saudi Arabia seeks to penetrate the East Asian market in the wake of the economic crisis.
In the wake of the Saudi economic crisis caused by declining oil revenues, Saudi Arabia has reduced its oil prices for Asian customers in order to attract more customers, and is seeking to gain market share in East Asia.
The Indian newspaper Business Standard reported that Saudi Arabia is trying to revive one of its largest markets in East Asia, as it has recently lost its largest market in Asia following the corona outbreak and its aftermath.
According to the Indian newspaper, Saudi officials are trying to compete with other producers in terms of price in order to gain market share in these markets.
Saudi Arabia has cut oil prices for sale to Asia more than doubled next month, indicating that the world’s largest crude oil exporter wants to encourage buyers to buy more, the report said.
Saudi producer Aramco is cutting the price of all its oil for its largest market in Asia. Three consecutive months of rising official sales prices have made refineries uncomfortable.
But with Brent crude up 40 percent this year, OPEC Plus is seeing enough demand to boost production. Saudi Arabia, which sells all its oil to refineries on long-term contracts, is shunning customers if it sets monthly prices too high.
“Because of the high price of direct sales to Saudi Arabia in recent months, traders have turned to domestic markets instead of using long-term contracts,” said Giovanni Stonew, a commodity market analyst at the Swiss bank. Thus, Aramco now wants to buy more oil from Saudi Arabia.
According to Aramco, the price of light Arab crude oil fell by $ 1.30 per barrel to $ 1.70 above the regional standard. According to a survey of six traders and refineries in Asia last week, Aramco was expected to cut the selling price of premium oil by about 60 cents a barrel. Asian refineries, Aramco’s largest customers, were surprised by the scale of the decline. According to buyers, the decline indicates that the Saudis are trying to compete with other producers in terms of price and gain market share from competitors.
These refineries are in trouble because fluctuations in demand have affected profits from the conversion of crude oil into fuels such as gasoline and diesel.
Saudi Arabia exports more than 60 percent of its crude oil to Asia, with China, South Korea, Japan and India being the largest buyers. Aramco keeps prices in the United States and northwestern Europe unchanged for October. For buyers in the Mediterranean, the price of different types is reduced by 10 cents per cent.
Astono said Aramco was not seeking to increase sales in the United States because it relied on strategic reserves as refineries on the Gulf Coast closed after the devastation of Hurricane Ida.
At its meeting last week, OPEC Plus extended the trend of increasing oil supply. This, along with concerns about oil demand, especially in Asia, prompted Saudi Arabia to reduce its oil prices for Asian customers.
At the same time, global oil supply has increased due to OPEC Plus’ decision to increase 400,000 barrels per day from August to December.
For the first time in four months, Saudi Aramco announced the official selling price of Arab Light crude for delivery to Asia in October at $ 1.70 a barrel higher than the average price of Oman and Dubai crude, the base price in the Middle East.
