Saudi Arabia floods markets with $25 oil as fight with Russia escalates

Saudi Arabia is flooding markets with oil at prices as low as $25 per barrel, specifically targeting big refiners of Russian oil in Europe and Asia, in an escalation of its fight with Moscow for market share, five trading sources said on Friday. The sources, from oil majors and refiners which process crude in Europe, said Saudi state oil company Aramco told them it would supply all requested additional volumes in April.

Sources previously told Reuters Saudi Arabia is also seeking to replace Russian crude in Asia with Chinese and Indian buyers. Tanker rates soared as Saudi Arabia chartered dozens of supertankers to take extra oil, including to the United States, where Russian oil is less popular. Oil prices have halved since the start of the year because demand has been hit by the coronavirus outbreak and after Russia and OPEC failed to reach a new deal on supply cuts.

Moscow refused to support new deeper cuts and Riyadh retaliated by opening its taps and pledging to pump record volumes on to the market. Russia has so far said it is not planning to come back to the negotiation table despite feeling the pressure from the extraordinary Saudi moves. Energy Minister Alexander Novak said on Friday Russia saw no grounds so far for returning to discussions with its OPEC+ partners and can increase its oil production by 200,000 barrels per day in April.

Saudi Arabia has made a deep cut to its official selling prices for oil. Arab Light and Arab Medium barrels were offered at selling price of $25-28 per barrel on CIF Rotterdam basis, traders said. Russia’s main blend Urals has been offered slightly higher than $30 per barrel on CIF Rotterdam basis, according to Refinitiv Eikon data.

On Thursday, sources told Reuters Saudi Arabia started focusing on boosting supplies to traditional buyers of Urals as it is trying to replace Russian oil in refiners’ feedstock around the world, from Europe to India. Brent crude prices were on track for their biggest weekly fall since the 2008 financial crisis on Friday as investors fretted over the impact of the virus on demand and the Russian-Saudi price war.

Saudi Arabia floods markets with $25 oil as fight with Russia escalates, Reuters, Mar 13