Oil Trading Down by More the 3% After Saudi Arabia Cuts its Official Selling Price to the Lowest Since November, 2021
08:57 AM EST, 01/08/2024 (MT Newswires) -- Oil prices fell by more than 3% early on Monday after Saudi Arabia cut its export price to the lowest in more than two years, another sign of flagging demand even as geopolitical risk remains high amid conflicts in the Middle East.
West Texas Intermediate crude for February delivery was last seen down US$2.60 to US$71.21 per barrel, while March Brent crude, the global benchmark, was down US$2.54 to US$76.22.
Saudi Arabia on Sunday cut its official selling price for exports to all regions by US$2.00 per barrel to the lowest since November, 2021, Bloomberg reported, as demand for oil remains lackluster. The cut comes even as Israel's war on Hamas continues, while Red Sea shipping is disrupted by attacks on vessels by Yemen's Houthi militants and production from Libya's 300,000 barrel per day Sharara oilfield remains shut in due to protests.
"Crude oil trades lower after Saudi Arabia cut its February official selling prices (OSP) for all regions, underscoring the current tug of war between a worsening global demand outlook and concerns that Red Sea tensions and the Israel-Hamas war could spill over into a regional conflict. However, while supply disruptions remain a threat only, slowing demand is real and it may bring focus back on OPEC+ and their ability to keep prices supported in the $70 to $75 area," Saxo Bank noted.