Saudi Arabia slashed pricing for November oil shipments to Asia and the United States. On the back of the OPEC price war, the kingdom is striving to protect its share in Asian and American sales markets. While countries battered by tumbling oil prices are appealing to major oil exporters to make joint efforts and halt an ongoing slump, Saudi Arabia is seeking to keep its oil competitive with rival suppliers amid sluggish global demand. By the way, rival oil producers in the Gulf announced lavish discounts last month. Saudi Arabia and other OPEC members prefer to struggle for their market share instead of decreasing output to boost prices. Saudi Arabian state-owned oil company (Aramco) trimmed its official selling price for medium grade crude by $3.20 a barrel. Earlier, the company offered a $1.30 discount a barrel for October sales. Nowadays, the main market for Saudi crude is Asia, which is the only growing market worldwide. It is no wonder the biggest discounts have been offered to Asian customers. According to Bloomberg, discounts for the medium grade to Asia have been widened by the most since February 2012. At the same time, despite the collapse of global oil prices and the OPEC price war, Saudi Arabia is not going to scale back investments in the crude production. Interestingly, the kingdom is pursuing this policy amid financial troubles. Falling oil prices bring lower fiscal revenues, which mean a tight public budget. It makes sheikhs dissatisfied with this state of affairs. As a result, billions of dollars are withdrawn from overseas accounts back to the domestic economy. Saudi Arabia’s sovereign wealth fund (SWF) totaled the whopping $737 billion just a year ago, in August 2014. However, the wealth has been gradually waning. The budget deficit of Saudi Arabia is expected to be nearly 20%. The government finds it difficult to cut its expenditures even under such complicated conditions.
