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IEA: the war between Russia and the Middle East for the European oil market is strengthening

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IEA: the war between Russia and the Middle East for the European oil market is strengthening

IEA: the war between Russia and the Middle East for the European oil market is strengthening
July 13
14:00 2016

The price struggle for oil buyers from Europe between Russia and the Middle East producers is gaining momentum and is becoming more intense, according to the further review of the International Energy Agency (IEA), which is published monthly.
Iran, Iraq, Saudi Arabia and Kuwait are trying to capture the oil market, traditional for Russia. For example, Iran as well as Saudi Arabia started to supply raw materials to Poland. The company Saudi Aramco lowered prices for August futures for the consumers of the Mediterranean Europe. It is expected that the company’s competitors from the Middle East will go the same way.

IEA predicts the oil production growth in Russia this year by 120 thousand barrels per day (b / d.) – to 11.18 million b / d. The growth will replace the fall next year to 11.14 million b / d. At the same time, the agency adjusted its forecast for the processing of raw materials to the Russian refineries in the third quarter by 150 thousand b / d – to 5.5 million b / d. However, compared to the previous year, processing volumes will be lower by 290 thousand b/ d. In May of this year, Saudi Aramco and PKN Orlen signed a contract for the supply of 200 thousand tons of crude to refineries of the Polish company every month. The contract is effective from the first of May this year. In addition, the contract may be automatically renewed. Oil will be processed at the Polish, Czech and Lithuanian refineries.

“This is the first direct long-term contract of our company with the supplier from the Persian Gulf region. This suggests the plans of strategic diversification of oil supply sources, which is based on a partnership with proven oil producers from different geographical regions, providing an optimal supply structure and good financial conditions”, – said PKN Orlen.

Russian oil companies are worried because of the Saudi Arabia oil emergence in the markets of Eastern European countries, particularly Poland. The president of the company Rosneft Igor Sechin, made a statement that the Saudi Arabia oil emergence caused a collapse in prices in this market.

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