(Bloomberg) -- Saudi Arabia lowered March pricing for Asian oil customers as the world’s largest crude exporter shows no signs of letting up on its campaign to keep market share, especially with Iran set to boost sales.
State-owned Saudi Arabian Oil Co. lowered its official selling price for Arab Light crude to Asia by 20 cents a barrel to $1 a barrel less than the regional benchmark, the company said in an e-mailed statement Thursday. Saudi Aramco was expected to widen the discount by 40 cents a barrel, according to the median estimate in a Bloomberg survey of seven refiners and traders in that region.
Oil has lost about 6 percent this year on the outlook for increased exports from Iran after the removal of international sanctions. Saudi Arabia , the largest producer in the Organization of Petroleum Exporting Countries, had output in January that was close to a record one month after OPEC abandoned its oil-production targets.
“Neither of them will want to give up an inch on market share until the situation is more clear in terms of how much additional supply is coming to market,” Robin Mills, chief executive officer of Qamar Energy, said by phone from Dubai. “Iranians are trying to get back into the market and Asia is going to be the premiere market for both of them.”
Iran will probably add 600,000 to 800,000 barrels a day of new production to the market this year, Mills said. Its output was 2.86 million barrels a day in January, according to data compiled by Bloomberg. Saudi Arabia pumped a record 10.48 million barrels a day in June, according to the International Energy Agency, and was at 10.2 million barrels a day last month, data compiled by Bloomberg show.
OPEC officials have said excess production will fade this year as higher-cost suppliers outside of the group scale back output. Saudi Aramco officials have said prices will rise by the end of this year as demand grows.
“The gap between supply and demand has started shrinking,” Aramco Chief Executive Officer Amin Nasser said at a Jan. 26 conference in Riyadh. “We will see some adjustment, but it will happen toward the end of this year.”
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