Saudi Arabia trying to claim upperhand in Asian oil market; slashes oil prices by $1.5/barrel

Riyadh : In an attempt to have an upper hand in the Asian oil market, Saudi Arabia gave a big jolt to Russia and Iran by slashing the oil prices. Saudi Arabia’s largest oil company, Saudi Aramco, has slashed the price by $1.60 per barrel in its supply of oil to Asian countries.

Sources say that at the same time the oil being exported to America has also been slashed by 20-40 cents. By proposing a slash in prices in a span of two months, it is clear that the Saudi oil price is paving a way for a new war.

In the past few months both Russia and Iran were trying very hard to find their market for oil exports, especially in Asia. The consequences of this are now seen and the new figures show that Saudi’s dominance in Asian markets was badly hit.

Russia has been the biggest exporter of oil to China. In the last three months Russia has exported the maximum amount of oil to China. Iran also increased its oil export to India, China, South Korea and Japan. In comparison with the last four years Iran increased its oil exports to these four countries by nearly 47%. This is a record-breaking feat for Iran. Since 2015 November, Iran has increased its oil exports by three times in a span of mere seven months. It is apparent that at this rate, Iran is confident that it will meet with the permissible amount of exports before the new rules become applicable. Saudi has become restless due to this increase in oil exports by Iran and Russia.

China, Japan, India and South Korea are known to be the biggest importers (clients) of oil from Saudi Arabia in the Asian market. Russia and Iran have increased their exports to these countries so a new ‘oil war’ seems to be starting between Saudi and Iran.

Last month Saudi had slashed the oil price by 40 cents per barrel to gain business. When it did not make much difference in demand in the oil market, Saudi announced a slash in the price of oil straight away by $1.50 per barrel.

Saudi Aramco, the oil company stated that the new price would be applicable to oil exports for the month of September 2016. This decision by Saudi will mainly affect countries like Iran and Nigeria. It is feared that the exports of other countries known to be collaborators with Saudi, like the UAE and other Gulf countries will also be affected. Experts say that oil prices will also receive a blow because of this decision by Saudi Arabia.

In the last few months there has been a fluctuation in oil prices. Saudi and other countries have warned that there will be no increase in production. But the slash in price may hit a severe blow to other oil trading countries