Saudi Arabia state- owned company Saudi Aramco has cut its crude oil prices to Asian bauyers for March to a record low.
The company lowered its official selling price for Arab Light crude by 90 cents to $2.30 a barrel less than Middle East benchmarks and the lowest in at least the 14 years since Bloomberg began gathering data.
Aramco also cut the differentials on each of the four other grades it sells to Asia. The discount on Extra Light crude dropped to a low of at least 14 years and Arab Medium was cut to within 10 cents of its record discount.
However, it raised prices for the U.S., northwest Europe and the Mediterranean region by raising the differentials for next month on all crude by 15 cents and pushed the premium for Arab Light to 45 cents more than the U.S. Gulf Coast benchmark.
This has been seen by analysts as a move to preserve its market share.
“This is further evidence that they are hellbent on protecting their market share in China,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.4bn, told Bloomber. “They are trying to stay competitive in what is the biggest area of growth.”
“The U.S. used to be the market the Saudis were most concerned about preserving market share in, but that’s no longer the case,” said Olivier Jakob, managing director of Zug, Switzerland-based researcher Petromatrix GmbH.
“China is where they see growth coming from in the decades ahead and the U.S. is also producing a greater share of the oil it needs.”
Saudi Aramco has been competing with producers from South America, Africa and Russia for its largest market- Asia, which was also the world’s second largest crude buyer after the U.S. in 2014, according to International Energy Agency data.
Last year, amid slower economic growth and weakened demand, the Kingdom’s share among the top three suppliers to China fell to 37% in December, from 44% in October, as the country lost ground to Angola and Russia.
