Saudi Arabia “Invades” Russian Oil Markets


With Russia focused on its conflict in Syria, Saudi Arabia has been making aggressive moves of its own, but purely economic ones. With the current price of oil still severely depressed, Saudi Arabia has been casting its eye away from its traditional buyers and looking further afield to find places where it can sell its surplus oil to bolster its export income.

European Crude Supplies

The latest oil battleground appears to be Poland as Saudi Arabia is starting to offer the country its oil at a significant discount, undercutting Russia’s prices, in attempt to gain a foothold in this lucrative market despite the fact that most eastern European refineries are designed to process Russian crude.

With this move, Saudi Arabia is trying to bolster its share of the European market, a market it used to supply in the 1970’s before Russia constructed pipelines from its West Siberian oilfields to supply crude to European markets at a cheaper price. In the 1970’s Saudi Arabia supplied roughly half of Europe’s oil but after Russia started to muscle in, this has steadily declined to around eight percent today.

Why Poland?

Despite the fact that Poland has traditionally relied on Russia for three quarters of its crude oil, the European Union is starting to make a push for its members to reduce their reliance on Russia for their energy supplies. This is mostly driven by Russia’s increasingly aggressive moves in the Ukraine and elsewhere in the world.

For Saudi Arabia, it is a golden opportunity to off load some of its excess oil with demand in Asia falling on the back of China’s current woes. This could also be a bit of “tit-for-tat” as Russia has been making moves into Asia, particularly China, reducing Saudi Arabia’s exports to its traditional customer base.

This kind of price war is the last thing that oil needs at this time. However, with the two oil giants bumping heads ever more frequently, with clashes over pipelines in the Middle East just the tip of the iceberg, the outcome of the war in Syria may end up have bigger economic rather than political implications.


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