Beijing’s Saudi gamble

ENAR

It is one of those economic oddities that Saudi Arabia, regularly the world’s top oil producer, does not set the price for the oil it sells. While potentially wielding great influence over global supplies of oil through ramping up or decreasing production, the kingdom limits itself to operating within the Organization of Petroleum Exporting Countries’ (OPEC) quota system; Saudi Arabia is a price taker, not maker, using OPEC’s Secretariat Crude Oil Basket Daily Price — a reference basket weighing crude from all 12 OPEC member countries — and a market-related base price to sell its oil. So when a delegation from the Shanghai Futures Exchange (SFE) showed up in Riyadh over the new year to petition the Saudis to sell their crude via the Chinese marketplace, it came as a bit of a surprise. The kingdom has long indicated it is in no mood to directly market its oil, let