In Saudi Arabia’s search for new markets to purchase its oil, Europe has emerged as a potentially lucrative areas. The main reason stems from a desire the cut into the market share that the Russians have had with this specific region, especially those with former Eastern Bloc ties.
However, another market rival has been making inroads in the country of Poland, where the Saudis have usually found a willing market for their medium sour barrels. That country is Iran, which has only recently emerged from punishing economic sanctions that have taken a toll on the Iranian economy.
In an effort to get back on track, oil interests from Iran have linked up with at least two Polish refiners. Poland’s second-largest refiner, the Baltic Sea port of Grupa Lotos in Gdansk, had purchased two million barrels of light crude oil from Iran last July, then stopped before starting up again in late December.
Saudi Arabia began selling oil to Poland in September 2015, slicing into the Russian market share by undercutting them on prices. The Saudis were able to sell the commodity at a reduced price due to decades worth of ample profits, yet began the process approximately 15 months after the market price of oil began sliding.
That slide eventually cut the price of a barrel of oil by more than 50 percent, which has forced the Kingdom to take economic steps to account for the steep losses in revenues. The move into Poland was predicated on the fact that the Iranian sanctions would be ending soon, which meant that the Saudis needed to establish a foothold.
Given the rivalry between Saudi Arabia and Iran, it’s likely that this is one of the early volleys in a battle that will play out over the next few decades