How do you sell more oil?
In the short term it is not by killing the flat price
You do it by Dropping differentials and make refinery margins higher, therefore refineries buy more. Product Cracks fall due to oversupply stimulating demand.
It is because Product prices are typically calculated by a benchmark oil price +/- crack.
Therefore as the price of oil drops so does the product price. Refinery really gains nothing from it.
In theory it should be + or - to the benchmark depending on the margin it produces versus the benchmark in an Atmospheric
Simple Refinery margin without secondary units is simply total of product prices - crude price
As said before each product price is the oil benchmark price +/- product crack
Crude price is benchmark price +/- differential - freight
So you can see that by dropping the differential as Saudi has done increases the refinery margin. Which means refineries run harder and buy more Saudi crude