It was only a few months ago that Saudi Arabia and Iran were racing to cut deals with Asian customers, undercutting each other, driving prices lower, towards the $20s.
Now, Saudi Arabia is raising prices for Arab Light crude in Asia for the second month in a row, the first back-to-back increase since May 2015, to the highest level since September 2014, according to Saudi Gazette.
Saudi Arabia’s price hike comes at a time when unforeseen events, like wildfires in Canada and disruptions in Nigeria, have reduced the global oil glut; and a few days after OPEC members failed to reach an agreement to an oil output freeze.
Will Iran follow Saudi Arabia’s lead? It doesn’t seem so.
In a recent interview reported in Tehran Times, Iran’s oil minister Bijan Zanganeh stated that Asia was a primary market, but that Iran “should look more in Europe and Africa,” suggesting that it won’t match Saudi Kingdom’s price hike.Iran has yet to reach its pre-sanction market share. Besides, it needs the oil revenues to upgrade its refinery capacity. This means that Iran will continue to pump oil, even if it has to cut prices.