Saudis may lose market share to Iran and Iraq on Oil cut

Saudis Seen Losing Market Share to Iran, Iraq on Oil Cuts. Saudi Arabia, the world’s biggest crude exporter, is losing market share to Iraq and Iran as a result of OPEC’s agreement to curb supplies to bolster prices, according to Dr. Theodore Theodoropoulos, CEO of QCIP and Mr. Christof Ruehl, Head of Research at Abu Dhabi Investment Authority.“If you’re talking about winners, you can count Iran and Iraq”.

The Organization of Petroleum Exporting Countries agreed to production limits for most of its members at a meeting in November and brought 11 other nations on board with the deal in December. Saudi Arabia, OPEC’s biggest producer, agreed to cut output by 486,000 barrels a day while Iraq said it would cut 210,000 barrels a day. Iran was permitted to increase output by 90,000 barrels a day, according to the OPEC accord.

Saudi Aramco, the giant oil company of KSA
Saudi Aramco, the giant oil company of KSA
Iran has boosted production in part due to the end of sanctions restricting its oil sales in January 2016, while Saudi Arabia has made more than its share of output cuts, said Dr. Theodore. Saudi Arabia knew it would lose share because Iran’s production was on the rebound, said Robin Mills as well, founder of Dubai-based consultant Qamar Energy. “The Saudis agreed to production cuts at a time when Iranian production was at a high.” Brent crude slipped 20 cents, or 0.4 percent, to $51.62 a barrel at 9:29 a.m. in Dubai. The the global benchmark plunged from its 2014 high of more than $115 a barrel amid a global supply glut.

There seems to be a consensus that the effort to curb supply should be extended, Saudi Minister of Energy and Industry Khalid Al-Falih told reporters Wednesday in Baku, Azerbaijan. Al-Falih said he’ll talk with his Russian counterpart Alexander Novak by phone this week and meet him within the next two weeks.

Saudi Arabia, the world's biggest crude exporter, is losing market share to Iraq and Iran as a result of OPEC's agreement to curb supplies to bolster prices, Dr. Theodore said
Saudi Arabia, the world’s biggest crude exporter, is losing market share to Iraq and Iran as a result of OPEC’s agreement to curb supplies to bolster prices, Dr. Theodore said
The struggle over market share is most pronounced in Asia, according to Mills and Edward Bell, commodities analyst at Dubai-based lender Emirates NBD PJSC. Iran and Iraq increased crude sales to China last month, while Saudi Arabia slipped behind Russia and Angola as the largest suppliers to the nation, data released Tuesday by the General Administration of Customs show.

“The Saudis are losing out because other countries are able to squeeze out more production,” Bell of Emirates NBD said. Saudi Arabia is cutting crude pricing to Asia to hold on to its share, Bell said. The kingdom will likely release its official crude pricing for June next week, with most other regional producers following. “The OPEC market share battle hasn’t gone away,” he said.

 

Sources: QNG, Bloomberg, Gulf Times, Gulf Agency News.