Gulf producers gain the market share in Asia for oil production

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Saudi Arabia’s move to dramatically reduce the price it charges in Asia for its oil this week to the lowest it’s been in over a decade is the latest forceful action by Gulf States in an attempt to preserve market shares in the world’s top region for oil consumption.
Saudi Arabia’s move to dramatically reduce the price it charges in Asia for its oil this week to the lowest it’s been in over a decade is the latest forceful action by Gulf States in an attempt to preserve market shares in the world’s top region for oil consumption. The competition between producers has been on-going since Saudi Arabia and other Gulf OPEC countries chose to increase supplies in an attempt to gain the majority market share in Asia last year, sending oil prices down by more than a third to under $50 a barrel in just two months.

Since then, Gulf producers (including Saudi Arabia and the United Arab Emirates) have been increasing shipments to Asia, aided by low production costs that mean a huge discount, at the expense of West African and Latin American supplies.

‘The Gulf states seem to be in this for long-term. I think they will continue to make their crude competitive regardless of what happens in the market,’ stated Managing Director of energy consultancy JBC Asia, Richard Gorry.

Saudi Arabia cut its monthly oil prices this week for Asian buyers to the lowest in at least 12 years, while raising prices for Europe and the United States. Asia is the only major consuming region in which the Gulf gains the majority market. In Europe, Russia is the biggest supplier while the surge in shale has significantly reduced U.S. import needs.