Saudi Arabia slashed its oil prices for Asian and U.S. buyers on Thursday, in a move some analysts said shows it is stepping up its battle for market share a week after refusing to support OPEC output cuts. Official Selling Prices (OSPs) for oil from the largest producer and exporter in the Organization of the Petroleum Exporting Countries have been seen as possible indications of the kingdom’s oil policies.
Some analysts have said sharp drops in OSPs in recent months show the kingdom is fighting for market share with other producers, but others have said the OSPs only reflect the market and are a backward-looking rather than a forward-looking indicator. The discounts on Saudi crude oil for Asian customers in January were the biggest since at least 2002, according to Reuters data, while prices were cut to the United States for the fifth month in a row.
“(The) Saudis are making it clear they don’t want to lose market share,” Richard Mallinson, an analyst at consultancy Energy Aspects, told the Reuters Global Oil Forum. Saudi Arabia and other rich Gulf producers last week blocked proposals from poorer OPEC members, such as Venezuela and Algeria, to cut output to support oil prices, which have plummeted by over a third since June.