Amid huge glut on market, Saudi Arabia cuts crude price to Europe

Friday 01/01/2016
Iran-Saudi tensions punch another hole in OPEC unity

RIYADH - Saudi Arabia has cut the February price of its export oil to Europe as the OPEC heavyweight continues to fight for market share amid a huge glut on the market.

The Saudi move comes as arch-rival Iran, a fellow OPEC member, prepares to resume oil exports to Europe when sanctions are lifted following its nuclear deal with world powers last year.

It also comes amid a mounting crisis between Riyadh and Tehran, which has seen Saudi Arabia cut diplomatic ties with Iran after weekend attacks on its missions in the Islamic republic.

The kingdom also slightly cut the price of some export grades to the United States and Middle East, but raised the prices of all export grades to Asia.

A statement issued by national oil conglomerate Aramco said the price of Arab Light crude for the northwest European market was cut by $0.60 a barrel from January to $4.85 a barrel below the benchmark price.

Prices of other grades were also cut by 40 to 50 cents a barrel, the statement said.

Europe was a traditional market for Iranian oil before international sanctions were slapped on the Islamic republic in 2012 over its nuclear programme.

The price of Arab Light crude for Asia was raised by 60 cents a barrel, but remained 80 cents below the benchmark price, the statement said.

The prices of all grades to Asia were increased by $0.70 to $1 a barrel.

Brent oil prices tumbled Wednesday below $35 for the first time in 11 years, plagued by the abundant oversupply and the row between Iran and Saudi Arabia.

At about 1030 GMT, European benchmark Brent North Sea crude oil for February delivery sank to $34.83 per barrel-- the lowest level since July 1, 2004.