Oil Price Will Continue Declining for Price War
Although oil price has already declined to the lowest level in two years, Saudi Arabia, the largest global oil exporter is willing to start price war to defend its market shares. Analysts from Citigroup and Commerzbank consider that the action may result in oil price declining further.
Saudi Aramaco, the largest oil export merchant began to reduce all of price of export good on October 1. The price exported to Asia has reduced to the lowest level since 2008. Commerzbank says that the action means that as one of the most important members of OPEC, Saudi Arabia is preparing for price war, instead of decreasing production to ease oversupply in the market.
Seth Kleinman, the person of Citigroup who is in charge of European energy research said that there were no signs that Saudi planed to reduce production to maintain price. “The markets of Saudi in market are eroded seriously. Saudi Arabia is preparing for price war. They will win the war without any cost.” He said.
Before that, Saudi had ever restrained production several times for preventing oil price from falling. After financial crisis broking out, oil price crashed. OPEC decided to reduce 5 million barrels of oil per day. Saudi had the largest range in all of members of OPEC. Citigroup and Barclays Bank predict that Saudi needs to reduce 5 hundred thousand barrels per day to be faced with current oversupply.
Saudi Aramaco has already reduced official selling price of oil to all of regions in November. Among that, price of light oil sold to Asian refinery plants was decreased by 1 dollar per day. At present, discount reaches as high as 1.05 dollar which is the largest discount since December in 2008.
Saudi Aramaco, the largest oil export merchant began to reduce all of price of export good on October 1. The price exported to Asia has reduced to the lowest level since 2008. Commerzbank says that the action means that as one of the most important members of OPEC, Saudi Arabia is preparing for price war, instead of decreasing production to ease oversupply in the market.
Seth Kleinman, the person of Citigroup who is in charge of European energy research said that there were no signs that Saudi planed to reduce production to maintain price. “The markets of Saudi in market are eroded seriously. Saudi Arabia is preparing for price war. They will win the war without any cost.” He said.
Before that, Saudi had ever restrained production several times for preventing oil price from falling. After financial crisis broking out, oil price crashed. OPEC decided to reduce 5 million barrels of oil per day. Saudi had the largest range in all of members of OPEC. Citigroup and Barclays Bank predict that Saudi needs to reduce 5 hundred thousand barrels per day to be faced with current oversupply.
Saudi Aramaco has already reduced official selling price of oil to all of regions in November. Among that, price of light oil sold to Asian refinery plants was decreased by 1 dollar per day. At present, discount reaches as high as 1.05 dollar which is the largest discount since December in 2008.
