Oil refiners in Europe are cutting their longstanding use of Russian crude in favour of Saudi grades thanks to aggressive price discounting, reported Reuters.
“I’m buying less and less Russian crude for my refineries in Europe simply because Saudi barrels are looking more attractive. It is a no brainer for me as Saudi crude is just cheaper,” revealed a trading source with one major, someone who is not allowed to speak to the media.
Seth Kleinman, the head of energy research at Citigroup, said that Russian competition has become so intense in Asian markets in recent months that Saudi Arabia had to reduce supplies there in the face of growing deliveries from rivals such as Russia, Kuwait and Angola.
“There is a perception that because Russia has been pushed from the West, they have been turning to the East. In fact, Russia has been actively locking market share in Asia for a long time,” he added.
“The Saudis want to secure the market share before Iran comes back,” said a trading source with another oil major.
Rosneft chief Igor Sechin had complained before about Saudi Arabia’s decision to begin supplying ex-communist Poland at what he called “dumping” prices.
In related news, Russian Energy Minister Alexander Novak will visit Iran on October 21, the same day as Russian and other oil producers meet with officials from OPEC in Vienna, said Press TV.
He is set to meet Iran’s Minister of Petroleum Bijan Zangeneh, among other officials, to ramp up bilateral trade to $10 b a year from the current $2 b figure.
Novak had also described the Saudi entry into eastern European markets as the “toughest competition”.