With global oil prices falling, OPEC-kingpin Saudi Arabia has cut prices instead of cutting production.
Crude oil prices have tumbled more than 23% since June, including a more than 4% drop on October 14. Prices fell below four-year lows to wind up at $81.84 a barrel for the benchmark grade, West Texas Intermediate.
Saudi Arabia’s strategic rival Iran followed suit although Tehran claims the discount for Iranian crude had nothing to do with historic differences.
Mohsen Qamsari, director of international affairs of the National Iranian Oil Co., said on October 11 that Iranian oil prices aren’t falling because of anyrivalry with the Saudis. “Economic conditions, the market supply and demand and the price of petroleum products in the market are some factors behind the price slide,” he said.
OPEC in itslatest monthly market reportsaid Iranian crude sold for $96.14 per barrel in September, versus the $95.98 for Saudi blend Arab Light. Both grades for September traded an average 5% less than the August price.
Signs of a Chinese economic slowdown and decreased North American demands given the glut of oil there means members of the Organization of Petroleum Exporting Countries (OPEC) are fighting for market share.
Riyadh is now competing more vigorously with Russian and West African exporters for the Asia market. It is also competing against deeply discounted Canadian oil sands production for US refiners along the Gulf of Mexico.
OPEC production has climbed to a 13-month high, bolstered by a recovery in Libya and higher Iraqi output.
OPEC also said member state Iraq produced 3.16 million barrels of oil per day in September, up 4.4% from the previous month. Much of Iraq’s oil sector has beenspared from violencefrom the insurgency waged by the Islamic State of Iraq and al-Sham (ISIS). Most of the export terminals in Iraq are in the south of the country, far from away the territory controlled by the terrorist group.
Lower prices have pushed the budgets of Saudi Arabia, Russia, Libya and Iraq into the red. They have also deepened budget deficits in oil-exporting countries of Nigeria, Venezuela and Iran.
On October 10, Venezuela called for an emergency OPEC meeting. The next one is scheduled for November 27.
This year, rising US oil production has cut US imports. But the price drop also has hit US shale oil producers, driving down their share prices by about 25% on average in less than three months.
On October 14, the International Energy Agency (IEA) reduced its forecast for global oil consumption, citing stagnant economies in Europe, slow growth in China and slower than expected growth in energy consumption in other emerging markets.
http://www.neurope.eu/article/opec-producers-fight-market-share