It was only a few months ago that Saudi Arabia and Iran were racing to cut deals with Asian customers, undercutting each other, driving prices lower, towards the $20s.
Now, Saudi Arabia is raising prices for Arab Light crude in Asia for the second month in a row, the first back-to-back increase since May 2015, to the highest level since September 2014, according to Saudi Gazette.
Saudi Arabia’s price hike comes at a time when unforeseen events, like wildfires in Canada and disruptions in Nigeria, have reduced the global oil glut; and a few days after OPEC members failed to reach an agreement to an oil output freeze.
Will Iran follow Saudi Arabia’s lead? It doesn’t seem so.
In a recent interview reported in Tehran Times, Iran’s oil minister Bijan Zanganeh stated that Asia was a primary market, but that Iran “should look more in Europe and Africa,” suggesting that it won’t match Saudi Kingdom’s price hike.Iran has yet to reach its pre-sanction market share. Besides, it needs the oil revenues to upgrade its refinery capacity. This means that Iran will continue to pump oil, even if it has to cut prices.
(Forbes)
