Oil Tumbles After Saudis Slash Prices To Europe
"The Saudis are preparing for Iran’s return," said Mohamed Sadegh Memarian, who recently retired as the head of petroleum market analysis at Iran’s oil ministry, as they sharply cut the prices they charge for crude oil in Europe (to the biggest discount since Feb 2009). The move that will likely undercut Iran happens as sectarian tensions escalate between the rival Middle Eastern nations. As WSJ reports, the Saudi move appears to pave the way for a competition over European oil markets later this year when Iran is expected to increase its exports after the expected end of western sanctions over its nuclear program.
Saudis have slashed prices with the biggest discount to Europe sionce Feb 2009...
Whuich has sent crude prices lower...
As The Wall Street Journal reports,
Italy and Spain relied on Iran for 13% and 16% of their oil imports before the European Union banned such purchases under sanctions related to its nuclear program in 2012. Although the country was replaced in the market by Saudi Arabia and other countries such as Russia, Tehran is counting on rekindling those ties when it resumes exports.
Saudi Arabian Oil Co., or Saudi Aramco, the kingdom’s state-owned oil company, didn’t mention the conflict in its news release about the price cuts.
Aramco prices are set every month at a discount or premium to various regional benchmark prices, which go up and down based on supply, demand and other factors considered by the market. On Tuesday, Aramco said it was deepening the discount for its light crude by $0.60 a barrel to Northwest Europe and by $0.20 a barrel in the Mediterranean for February delivery.
Iranian oil professionals interpreted the move as a way to compete with Iran returning to the oil markets. The European Union is set to lift an embargo on Tehran as soon as next month.
...
Hamid Hosseini, the president of Iran’s oil exporters union, said he expected more competition from Saudi Arabia after the recent political tensions. But Mr. Hosseini, who is himself involved in talks with Iran oil buyers, said, “Iran will come back to Europe,” possibly by offering better credit terms and by bartering oil for goods.
Though it is still unable to sell in the EU, Iran has cut its nominal prices for North Western Europe by 27% in the past year.
* * *
(5 votes)
»
- Login or register to post comments
- Printer-friendly version
- Send to friend
- advertisements -
Game on boyz!
Some game. What happened to peak oil? Saudi fields going dry? Fields being flooded to extend their life? Falling production?
...These are very desperate acts by both Saudi Arabia and the USSA.
If this doesn't work....expect W W#3
Petrodollar is at all time risk of losing its world fiat position.
I eagerly await for the last breath of the house of Saud. They are wreaking havoc on the world economically, as well as geopolitically. IRan has survived without this money for years, the Saudis need this money desperately, and are living on borrowed time.
Whatever they can do to destroy the Russian economy and get the war started.
I have this crazy theory:
US and KSA have cut a deal to the effect that oil will go up as soon as the US economy is back on the rails.
So oil is never going up again?
You pessimist you.
A shit load of negative data, corruption and structural constraints notwithstanding, the USA isn't Japan (yet).
Yes, the U.S is Japan. The steadily declining yeild on the ten year helps to reinforce that fact. The fed is going to find out real quick just how little room they have to raise the front end of the curve.
Don't demographics and access to resources make a little bit of difference?
The real reason why the US isn't Japan is that the dollar is the world's reserve currency (for now) and with serious soverign debt issues overseas, it won't be rolling over just yet as capital looks for a place to park. They could do many more rounds of QE and still you'd see a flight to the USD.
This isn't good. Energy finance cost tied to real production costs has been knocked out of the park, and for the price to continue lower is like winding up a clock spring on the paper end. When see blows, you won't be able to see through all the confetti.
Shouldn't it have blown already?
Bartering oil for goods? That won't make the central planners of the world happy. If the Iranians start demanding payment in gold you know for sure the western powers will demand regime change.
Western Powers can 'demand' anything they like. The meeting in Moscow a few days back with Kerry, Lavrov and Putin however, suggests that the distinction between 'demands' and actions have been 'cleared up' shall we say, in very short order.
careful with the conjunction of "western powers" and "demands" and Russia. this article is about oil discount to europe, and some european powers are operating with Russia in Syria
just take a look how earnest the French Prez and Obama looked when they met, and compare to the picture of the French Prez meeting Putin, both smiling like gingerbread horses
europe does not produce oil in quantities. this price war is between the US, Russia, Saudi Arabia, Iran, etc. And spilling egg on all bystanders, as wars often do
Correct me if i'm wrong
but,is this how wars start?
First missile flies once everyone is short oil and long USD.
KSA is running their two minute drill/full court press. Not much more they can do other than stop production and put the brakes on the world economy's. Interesting times.
"Not much more they can do other than stop production and put the brakes on the world economy".
Why not do this? What is different between now and 1973? Why hasn't KSA got the US by the balls in the same way as before?
Regardless of what you're reading this is not a supply story, it's a demand story. We are in the midst of a global depression and there is no demand for oil. If you will recall when oil was pushing $140 per barrel all the "experts" were shouting that there is nothing that OPEC can do to reduce the price of oil because they don't have the spare capacity. And now suddenly we are to believe they have the capacity to over supply the world? Please, some of us have memories that go further back than last night's episode of Funny cat videos.
I don’t know? Maybe SA feels the shift to elec, solar, US/other production and are desperately trying to salvage a dying era (albeit a few years from now)? Looking out long term they must sense decay. Best they put their fortunes to other use than trying to protect the inevitable.
Saudi reserves far more limited than widely believed? (Who really should safely presume to know except the House of Saud, that's one very important state secret).
ksa has been reporting the same reserves since the 90s, same as other opec members. iow, they according to them they have pumped and sold NO oil.
Which begs the question, how could anyone argue for "peak oil" (or the converse) when the data is all rigged?
The world has changed. Too many players in the oil market now. Nobody wants to do business with an unreliable supplier and KSA needs the cash to fund their welfare state. That's why Russia hasn't cut off gas to the EU yet.
I should dump my life savings into CCC energy bonds right now.
Guess a Hot Armed Conflict might spike up the Px a bit; but soon as the Public is reminded that IRN, UAE(with its Pipeline) and KSA can ship from outside of the Arabian Gulf, it'll go down again.
Of course, if the Players are out to destroy the Oil Refining and Distro Infra - then the Px should remain higher. Too bad demand isn't strong enough; and RUS is going to benefit from any MENA Petrol Disruptions.
Full Scale War? It'll take awhile for the Contestants to Gear Up. Sat Images would most likely be posted by RT.
"The move that will likely undercut Iran happens as sectarian tensions escalate between the rival Middle Eastern nations"
Can't they all just get along?
Oh look, Competion can be a real muther fucker. Huh Saudi Arabia...
The place to watch is Iraq. That is the world's last great gas station. Last of the Super Giants.
Oil production costs can be lowered. People really do work for 1 dollar a day. If it was a real dollar that would be fair.