The contention amid Iran and Saudi Arabia is gradually clearer in the oil policies of the two main producers in the Middle East. The two countries are currently regaining market share and the price war in the race for recurring US sanctions on Iranian oil.
Saudi Arabia, the largest producer of OPEC, has enlarged oil production to offset supply disturbance in other parts, including the expected loss of Iranian oil supplies following US sanctions on Tehran’s return earlier this year. The Saudis also cut their prices in the estimated Asian market in order to draw more customers as they boost supply.
Iran, OPEC’s third-largest producer, is trying to persuade its oil customers to persist purchasing Iranian oil although the US effort to control Iran’s output.
Iran has its official sales prices (OSP) at all levels for all markets declined in September, seeking revenue from what could be the latest oil sales to some Asian markets before entering the market before the US sanctions. Tehran has cut prices of its main types of oil for more than a decade, compared to similar varieties of Saudi Arabia’s oil types, according to data compiled by Bloomberg.
Last week, Iran’s National Oil Company (NIOC) significantly reduced OSP of Iran Light crude oil to Asia from $0.80 to $1.20 per barrel above the Dubai average. Oman used to determine the price of oil in Asia. September prices for the Iranian light into Asia are down 14 years compared to Saudi class being sold to the fastest growing oil market in the world, according to Bloomberg estimates.
Today, Iran is also slashing prices for all markets, with prices ranging from $0.50 to $1 for Asia, Northwest Europe, and the Mediterranean; 45 cut according to market and qualities.