Foreign Desk Report
MOSCOW: Behind a Saudi-Russian truce to stabilise oil markets with a record output cut, market players are seeing the two production heavyweights still trading blows in the physical market.
It is here, rather than in the world of futures prices, that a long-standing battle for market share carries on, particularly in Asia, shipping data analysed on Monday.
The rivals said last week they were ready to take measures if necessary to balance the market by cutting combined output with other OPEC+ members from May.
“Beyond the cooperative statements the fight is still going on,” a source at a trading firm told Reuters, adding that Saudi Arabia’s official selling prices (OSPs) signalled that the kingdom was targeting the Asian market, where demand remains relatively resilient during a global slowdown.
Russia has relied on Asian markets as a destination for its oil output since launching the 1.6 million barrel per day ESPO pipeline. This connects Russian fields to Asian markets through the port of Kozmino, the country’s main eastern export outlet, and also via a pipeline spur with China, the biggest Asian consumer. Saudi Arabia’s state oil company Saudi Aramco (2222.SE) and Russia’s Energy Ministry did not immediately respond to requests for comment. Russia’s state oil giant Rosneft (ROSN.MM) declined to comment.
Aramco cut its OSPs to Asia in May by $3 to $5 across all its grades, marking a second month of drastic cuts. Meanwhile, the price reductions on Aramco cargoes to Europe were smaller, with a few increases on its heavier grades. <OSP/O>
Likewise, Iraq, the United Arab Emirates and Kuwait slashed May prices on crude destined for Asia.
High supplies of May-loading Saudi crude oil to Asian markets, along with lower OSPs, have tipped differentials of Russian grades like Sokol SOK-DUB and ESPO Blend ESPO-DUB in Asia into freefall.
