The largest oil producers have been going through troubled times. The global oil glut has weakened prices for more than two years. Top exporters entered into fierce competition to retain their market share. So a price war is in full swing as the main market players are wooing every worthy customer. To make things worse, the bleak outlook for the oil market discourages energy investors. Recently, oil exporters have been struggling to win China’s favor, the second largest oil consumer. Every supplier is keen to grab a slice of the pie.
Traditionally, Saudi Arabia used to dominate China’s oil imports. However, China has shifted priorities from Saudi Arabia toward Russia. Meanwhile, Russia has been close on the heels of Saudi Arabia. Besides, Venezuela and Brazil have also scooped up some market share. Interestingly, Russia and Saudi Arabia, the main rivals, have reached an accord on cooperation and even created a working group to stabilize the global oil market. "If Russia intends to coordinate action alongside OPEC as recently indicated, the key incremental swing threat to Saudi Arabia potentially losing more market share is Iran. Iran has made a meaningful push back into China over recent months, with its market share recently approaching highs near 10% after dipping to as low as 5% during the years plagued by sanctions," Michael Tran, a commodity strategist at RBC Capital Markets, made a comment. Indeed, it does not make sense to underestimate Iran. Since the sanctions were lifted from Iran, it has ramped up oil output, relaunched its pre-sanction relations and set up on new sales markets. Iran has outrun its key competitors such as Iraq, Nigeria, and Angola. So Iran has increased its oil exports to India by over 285,000 barrels a day.
So the recent developments indicate Saudi Arabia will find it more and more difficult to assert its leadership.
