Saudi Arabia has slashed its oil prices for Asian and American buyers, a sign the world's largest oil exporter is stepping up its battle for market share a mere week after refusing to support Opec production cuts.
State-owned Saudi Aramco Oil cut the January price for its Arab Light grade for Asian customers by $1.90 a barrel from December to a discount of $2 a barrel to the Oman/Dubai average.
The Arab Light official selling prices (OSPs) to the US was set at a premium of $0.90 a barrel to the Argus Sour Crude Index (ASCI) for January, down 70 cents from the previous month.
Arab Light OSPs to Northwest Europe were raised by 20 cents for January from the previous month to a discount of $3.15 a barrel to the Brent Weighted Average, Reuters reported.
The discounts for Asian customers in January were the biggest since at least 2002, according to Reuters data, while prices to the US were cut for a fifth straight month.
Some analysts have said that sharp drops in the OSPs of oil in recent months show the kingdom is defending its market share with other producers.
Another view is that the OSPs only reflect the market and are backward-looking rather than a forward-looking indicator.
Commerzbank analysts said that the latest price cut to the US was "tantamount to a declaration of war to US shale-oil producers, in view of the significant decline in the price of the benchmark [US oil]."
Saudi Arabia and other rich Gulf producers last week resisted pressure from poorer Opec members, notably Venezuela, to cut oil output amid a glut in the global oil market.
Ordinarily, Opec should agree a cut in production, which will limit supply and push up falling prices.
But after a 27 November meeting, the 12-member cartel agreed not to reduce their production cap of 30 million barrels per day for the coming six months, a move aimed at putting pressure on US shale oil producers.
Oil prices are down some 40% since June.