Saudi Arabia is flooding markets with oil at prices as low as US$25 a barrel, specifically targeting big refiners of Russian oil in Europe and Asia, in an escalation of its fight with Moscow for market share, five trading sources said on Friday.
The sources, from oil majors and refiners that process crude in Europe, said Saudi state oil company Aramco told them it would supply all requested additional volumes in April.
Sources previously told Reuters Saudi Arabia is also seeking to replace Russian oil with Chinese and Indian buyers, although not all refiners received volumes they had asked for.
Tanker rates soared as Saudi Arabia provisionally chartered more than 30 supertankers to take extra oil, including to the United States, where Russian oil is usually less in demand.
Oil prices have been halved since the start of the year because demand has been hit by the coronavirus pandemic and the failure by Russia and OPEC to reach a new deal on supply cuts.
Moscow refused to support new deeper cuts, saying the impact from the virus could be much worse than thought, and Riyadh retaliated by opening its taps and pledging to pump record volumes on to the market.
Russia has so far said it is not planning to come back to the negotiating table despite feeling the pressure from the extraordinary Saudi moves.
Energy Minister Alexander Novak said on Friday Russia saw no grounds so far for returning to discussions with its OPEC+ partners and can increase its oil production by a modest 200,000 barrels a day in April.
By contrast, Saudi Arabia has pledged to raise output by 2.6 million b/d in April, including from stocks. Fellow Gulf producers have had to join in the battle for market share and have also announced production increases.
Saudi Arabia has made deep cuts to its official selling prices for oil. Arab Light and Arab Medium barrels were offered at US$25 to US$28 a barrel, traders said.
On Friday, Abu Dhabi National Oil Company (ADNOC) also offered steep discounts for its Murban crude for April, announcing forward prices for the first time in its history. It previously set prices retroactively.
Russia’s main blend, Urals, has been offered slightly higher than US$30 a barrel, according to Refinitiv Eikon data.
“We are happy with our allocation. The requests for April were confirmed. I look forward to May if prices remain that attractive,” a trader with a European oil company involved in the talks told Reuters.
European oil refiners including Total SA, BP PLC, Eni SpA and SOCAR have all had allocations for additional Saudi crude oil supplies in April confirmed, the sources said.
Saudi Aramco declined to comment. Total, BP, Eni and SOCAR did not immediately respond to Reuters requests for comment.
On Thursday, sources told Reuters Saudi Arabia started focusing on boosting supplies to traditional buyers of Urals as it is trying to replace Russian oil in refiners’ feedstock around the world, from Europe to India.
Brent crude prices were on track for their biggest weekly fall since the 2008 financial crisis on Friday as investors fretted over the impact of COVID-19 on demand and the Russian-Saudi price war.
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