Saudi Arabia can celebrate victory over its old rival Russia in the oil price war. Through the cunning marketing policy, Riyadh secured long-term contracts with new large buyers. Meanwhile, Saudi Arabia has been scaling back the aggressive policy of discounts. In March, state-run Saudi Aramco offered stunning discounts for buyers from Europe and Asia, thus wooing regular buyers of the Russian oil grades. No wonder, Russia lost several traditional customers. Interestingly, Saudi Arabia slashed its selling prices despite a new historic OPEC+ pact on staggering oil production cuts. That decision highlights Riyadh’s ambition to rule the oil market.
The price lists posted by Saudi Aramco in June does not look as lucrative as a couple of months ago. State-owned oil behemoth Aramco raised its selling prices to the greatest extent over the recent 20 years. Besides, Saudi-led OPEC and Russia agreed in April to cut oil production by 7.7 million barrels per day until the end of 2020. Remarkably, the Kingdom took on the commitment on deeper output cuts of 9.6 million barrels per day. Saudi Arabia has been fulfilling its commitments under the OPEC+ pact. This way, Riyadh sets an example to the other 23 cartel participants and sends a message that any attempt to challenge its leadership is doomed to failure. Outcome of any oil price war is obvious before it ends.
Oil prices perked up amid such developments in the cartel. Brent crude eventually surpassed $43.5 a barrel, though such a rally seemed out of the question two weeks ago. Last time, the Brent benchmark grade was trading at such levels exactly three months ago until Russia abruptly rejected the proposal to extend production cuts and withdrew from the OPEC+ deal.