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Kuwait biggest oil discount providing country to Asia

Kuwait biggest oil discount providing country to Asia

KUWAIT CITY: Kuwait is the country who is offering biggest discounts in term of oil trade to Asia. It is the facilitating Asian buyers from Asia for six years, joining Saudi Arabia and Iraq in lowering prices.

Kuwait is offering Asian buyers the largest discount for oil in six years, joining Saudi Arabia and Iraq in lowering prices. Kuwait Petroleum Corp., the state-run oil company, will sell its crude at $3.95 a barrel below the regional benchmarks next month, the company said in a faxed statement today. That’s the biggest discount since December 2008, data compiled by Bloomberg show. It was $2.10 this month.

Saudi Arabia, the world’s biggest oil producer, lowered its official selling prices to Asia and the U.S. on Dec. 5 after the Organization of Petroleum Exporting Countries decided last month to maintain production. Crude is trading in a bear market as the highest U.S. production in three decades exacerbates a global glut.

“In this situation of oversupply in crude, everyone has to defend his market share,” Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich, said by telephone today. “Producers are trying to sell as much oil as they can, even with low oil prices.”

Middle Eastern producers are competing with cargoes from Latin America, North Africa and Russia for buyers in Asia. They’ve lowered price differentials and maintained output, raising speculation they are seeking to defend market share.

Iraq’s discount in Asia is the biggest in at least 11 years and Saudi Arabia widened the discount on Arab Light to the most in at least 14 years.

 “The Saudi numbers to Asia were quite outside of the expectations,” Johannes Benigni, chairman of JBC Energy GmbH, said at an oil industry conference in Dubai yesterday. Middle Eastern suppliers to Asia are facing more competition from producers that used to sell oil into the U.S. or Europe, while buyers are seeking new, less expensive supplies, he said.

Persian Gulf oil producers sell most of their crude under long-term contracts to refiners. Most of the region’s state oil companies price their oil for sale in future months at a premium or discount to a benchmark.

Kuwait has sold its crude to Asia at a discount to Saudi Arabia since at least June 2000, according to data compiled by Bloomberg. Kuwait ranks third for output, along with the United Arab Emirates, among the 12 OPEC members, the data show.