Saudi Arabia’s move is aimed at supporting the market amid a seasonal drop in demand.
According to the reports, state producer Saudi Aramco has slashed its flagship Arab Light crude oil price to Asia, the country’s main market, by $2 to $1.50 a barrel above the benchmark, its lowest level in 27 months. The company also reduced oil prices for February delivery to northwestern Europe, the Mediterranean, and North America.
The move comes ahead of the traditional February and March slump in oil consumption, which analysts say may further increase the build-up in oil inventories that has worried market participants for months.
The situation already forced the OPEC+ group of major oil-producing countries, led by Russia and Saudi Arabia, to take a series of steps in recent months to support crude prices and help stabilize the global oil market. The global oil industry had a volatile year due to Western sanctions on Russia and, more recently, the Israel-Hamas war. The most recent move involved significant output cuts (around 2.2 million barrels per day) which the group agreed last month to extend into the first quarter of 2024.
Oil prices fell by more than 1% on Monday following Saudi Arabia’s announcement. Global benchmark Brent crude dropped 1.21% to $77.80 a barrel at around 07:30 GMT, and US benchmark West Texas Intermediate slipped 1.35% to $72.81 a barrel.
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