Saudi Arabia’s decision to cut prices for some of its crude oil exports is raising serious questions about the kingdom’s commitment to limiting production, analysts said.
Members of the Organization of the Oil Exporting Countries tentatively agreed last week to reduce oil supply. That effort to stabilize prices marked a change in course for top oil exporter Saudi Arabia and other producers, which had been cutting selling prices in order to grab market share over the course of a two-year oil downturn.
But on Wednesday, the kingdom’s state oil giant, Saudi Aramco, appeared to move away from the idea of price stabilization when it said it was lowering the cost of Arab Light and other crude products for November delivery to Asian customers, Reuters reported.
“It does fly in the face of the agreement. It’s just another thing that belies the agreement and the prices we’re at right now,” Again Capital Founding Partner John Kilduff told CNBC on Wednesday after crude futures hit highs going back to June. “It makes me think they’re not serious about any cutback agreement.”
In Kilduff’s view, Saudi Arabia is likely to continue competing aggressively for share as regional rival Iran claws back much of its crude export volume following the end of international sanctions against the country this year.