Saudi Arabia slashes crude oil prices for Asian, US buyers

Saudi Arabia on Thursday slashed oil prices for Asian and US buyers, which some analysts see as a move to step up its battle for market share a week after refusing to support OPEC output cuts.

Official Selling Prices (OSPs) for oil from the largest producer and exporter in the Organisation of Petroleum Exporting Countries (OPEC) cartel have been seen as possible indications of the kingdom's oil policies.

Some analysts have said sharp drops in OSPs in recent months show the kingdom is fighting for market share with other producers, but others have said the OSPs only reflect the market and are a backward-looking rather than a forward-looking indicator.

The discounts on Saudi crude oil for Asian customers in January were the biggest since at least 2002, according to Reuters data, while prices were cut to the United States for the fifth month in a row.

Saudi Arabia and other rich Gulf producers last week blocked proposals from poorer OPEC members, such as Venezuela and Algeria, to cut output to support oil prices, which have plummeted by over 33 per cent since June (See: Oil wilts as OPEC stands by Saudi decision not to cut production).

OPEC sources have said Saudi Oil Minister Ali al-Naimi told the OPEC ministerial meeting behind closed doors that OPEC should defend its market share, because production cuts would only boost rival producers, including U.S. shale oil companies.

Oil prices have been volatile since the OPEC meeting and are down around 40 per cent since June. On Thursday, Brent crude fell, trading below $70 per barrel.

Aramco cut the January price for its Arab Light grade for Asian customers by $1.90 a barrel from December to a discount of $2 a barrel to the Oman/Dubai average.

The Arab Light OSP to the United States was set at a premium of $0.90 a barrel to the Argus Sour Crude Index (ASCI) for January, down 70 cents from the previous month.

Arab Light OSPs to Northwest Europe were raised by 20 cents for January from the previous month to a discount of $3.15 a barrel to the Brent Weighted Average (BWAVE).