Saudi Arabia will have to make a difficult choice

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Saudi Arabia will have to make a difficult choice

July 03, 2018 - 13:59
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This month Saudi Arabia will have to make a difficult choice, when it comes to setting price for its biggest clients, Bloomberg reports. Reduction of market share at Asian market is in the middle of dilemma. After OPEC and its partners reduced output in the beginning of last year, Saudi Arabia encountered competition on behalf of the US and Iran.

Riyadh, Saudi Arabia | © apriltan18, CC0 1.0

This month Saudi Arabia will have to make a difficult choice, when it comes to setting oil price for its biggest clients, Bloomberg reports.

On one side, the largest OPEC’s supplier can reduce price to attract Asian buyers and satisfy US President’s request to increase production. On the other hand, supply reduction due to shipments disruptions from Libya to Venezuela allow Saudi Arabia increase prices and maximize profit.

Reduction of market share at Asian market is in the middle of dilemma. After OPEC and its partners reduced output in the beginning of last year, Saudi Arabia started losing its positions in the region that is a top oil consumer, since it encountered competition on behalf of the US and Iran. Now oil prices recovered to 2014 level, and OPEC agreed to increase output. Saudi Arabia then has to decide, what is more important: market share or price.

We will see soon what choice state corporation Aramco will make. Until then, Unipec, trade unit of Chinese oil refiner Sinopec, reduces deliveries from Saudi Arabia three months in a row, increasing shipment from the US.