Oil Dow As Saudi Arabia Makes Price Cuts

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Oil Dow As Saudi Arabia Makes Price Cuts

Oil Down By 2.5% As Saudi Arabia Makes Price Cuts

After Saudi Arabia made price cuts, the prices of oil dropped significantly. Another factor that sent the oil lower was an increased output from the OPEC members.

The WTI lost 2.7%, while the Brent Crude declined by 2.5% on the announcement of price cuts. The trading price of Brent was $76.77 with a change of -$1.99, while the WTI new price was $71.8 with a change of -$2.01.

During 2024's first seven days, oil prices jumped by 2% amid increased geopolitical tension & and hopes of increased demand.

Light Crude Oil At Historic Lows

However, all of that ended abruptly as Saudi Arabia decided to lower the prices of its light crude oil. After the change, Saudi's fair crude prices are now at 27-month lows.

According to experts, this move responded to other OPEC members and the supply issues. Another report says that other countries like Nigeria, Angola, and Iraq are offsetting the oil cuts from Saudi Arabia. The timing of the price cut is also critical as one country will exit from the OPEC group.

Against this backdrop, an analyst from IG said that the crude oil will likely be bearish in 2024. The reason for this forecast was higher production, lower OSP, and a build-up of inventories. The one factor that supports the oil prices in 2024 is the increased geopolitical tension in the region.

If more countries decide not to continue with the proposed price cuts, there's no way for the oil to stay at the current levels. After all, the demand is still weak while the big economies are trying deflationary measures. As a result, we can't put the hopes of higher oil prices on the market alone.

To sustain or push the current prices higher, the OPEC and OPEC+ members will need to coordinate further supply cuts.

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