Saudis want to flood Europe with cheap oil to squeeze out Russia, claims US media

Saudi Arabia is reportedly raising the stakes in its oil war with Russia by tripling crude shipments to the European market at massive discounts in a move that could further crash crude prices.

Europe may become the main battlefield for the two large oil producers after they failed to reach a new production-cut deal last week. According to Bloomberg, Riyadh offered to sell its Arab Light crude to Rotterdam for around $25 per barrel, seven dollars less that Russia's main export blend, Urals (as of Wednesday's pricing).

The kingdom's oil giant Saudi Aramco, which recently pledged to boost both export and production capabilities, reportedly offered extra supplies to European refiners such as Royal Dutch Shell, BP, Total, and OMV, among others. The shipments could be between 25 percent and 200 percent higher than regular ones, Bloomberg said citing sources familiar with the operations.

The reported oil dispute between Moscow and Riyadh has been affecting oil prices since the end of last week, resulting in a massive crash on Monday, when prices fell nearly 30 percent. On Thursday, prices of both the WTI and Brent fell by over five percent, trading at $31.23 per barrel and $33.81 per barrel respectively.

Neither Russia nor Saudi Arabia describe the current situation as an oil price war. The Kremlin announced on Thursday that a number of factors had had an impact on the price of oil, stressing that all players are “in the same boat.”

Russian officials have repeatedly stressed that the nation has enough reserves to shield its economy amid oil market turbulence. On Thursday, Prime Minister Mikhail Mishustin said that more than $570 billion in forex and gold holdings, as well as 10 trillion rubles ($133 billion) worth of liquid assets allocated by Russia's sovereign wealth fund, will be enough to offset budget expenses even if oil prices remain low.

"We have all the instruments to overcome the situation calmly, without any shocks. We have enough resources to maintain financial stability," Mishustin said. He added that low prices for oil and currency exchange rate volatility can create new opportunities for the Russian economy, and for import substitution programs in particular.

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