Saudi Arabia inundates markets with cheaper oil
Saudi Arabia is flooding markets with oil at prices as low as US$25 per barrel, specifically targeting big refiners of Russian oil in Europe and Asia, in an escalation of its fight with Moscow for market share, five trading sources said on Friday.
The sources, from oil majors and refiners which process crude in Europe, said Saudi state oil company Aramco told them it would supply all requested additional volumes in April.
Sources previously told Reuters Saudi Arabia is also seeking to replace Russian oil with Chinese and Indian buyers, although not all refiners received volumes they had asked for.
Tanker rates soared as Saudi Arabia provisionally chartered around 31 supertankers to take extra oil, including to the United States, where Russian oil is usually less in demand.
Oil prices have halved since the start of the year because demand has been hit by the new coronavirus outbreak and after Russia and the Organization of the Petroleum Exporting Countries failed to reach a new deal on supply cuts.
Moscow refused to support new deeper cuts, saying the impact from the virus could be much worse than thought, and Riyadh retaliated by opening its taps and pledging to pump record volumes on to the market.
Russia has so far said it is not planning to come back to the negotiating table despite feeling the pressure from the Saudi moves.
Energy Minister Alexander Novak said on Friday that Russia saw no grounds so far for returning to discussions with its OPEC+ partners and can increase its oil production by a modest 200,000 barrels per day in April.
By contrast, Saudi Arabia has pledged to raise output by 2.6 million bpd in April, including from stocks.
Fellow Gulf producers have had to join in the battle for market share and have also announced production increases.