Russia Hints at Oil Discount as OPEC Price War Escalates

A Russian government official has said that the country may consider offering a discount on its oil prices as it is determined to cling to its European market share.

Russia is ready to provide oil at a discount in order to retain its share of the European market, a government source told journalists on Saturday.

The announcement could be seen as a message to OPEC, which is meeting on December 4, that Russia is not willing to cut production, according to Reuters. Gulf countries such as Saudi Arabia have recently offered discounts on oil to undercut the competition.

"We will fight for our market [in Europe]. We will increase the discount on Urals. But don't think that the Saudis will easily occupy refineries which have traditionally used our oil, it's not technologically easy," the source told journalists.

According to the Wall Street Journal, Saudi Arabia has been particularly active in offering discounts, recently lowering prices by $1.7 a barrel against a United Arab Emirates benchmark. Saudi Arabia previously sold its oil at a 10 cent premium.

The source added that the low price offered by Iraq is a result of its low grade.

"We know that Iraq sells for $30, but the Basrah Heavy crude it sells is very heavy and not a competitor to Urals. Its real price is $35 and they give a five dollar discount," the source added.