Saudi Arabian oil is making inroads into Russia’s European oil market, causing large concern for the country. 

Russia has accused Saudi Arabia of ‘dumping’ oil into Europe. The head of Rosneft, Igor Sechin, said that such a strategy would probably backfire for Saudi Arabia.

Presently, 70% of Russia’s oil is sent into Europe. The increasing discount of so-called ‘Ural Oil’ to Brent Crude arriving into the continent suggests that Saudi Arabian oil is creating competition.

With the global price of oil already sending the Russian currency into free fall and the economy into a recession, the country scarcely needs competition depressing the price of the commodity further.

Output of oil in Russia reached a post Soviet record last month of 10.78 million barrels per day, as the country desperately tries to make up for the shortfall in revenues. Saudi Arabian inroads into the European market could damage the upside of a price recovery for Russia.

OPEC, of whom Russia are not a member, largely confirmed the situation in Europe earlier this month, when saying the reasons for the tripling of the discount of ‘Ural Oil’ to Brent were as follows; “plentiful supplies, sagging refinery margins and a wide availability of alternative grades from the Middle East.”