By Rhodri Morgan
The price of oil fell four per cent today as one of the world’s largest-producing countries forecast price cuts across its suite of oil for the coming weeks.
U.S benchmark WTI Crude had fallen 4 per cent as of 4pm GMT, while Brent Crude and Murban Crude logged slides of 3. per cent and 4.1 per cent respectively.
The falls come as Saudi Arabia cut official selling prices (OSPs) for its global crude output in February, with Asia seeing the biggest slash at roughly two per cent.
As well as the fragile geopolitical climates of the Russia-Ukraine and Israeli Palestine conflicts, effects on the global oil market were exacerbated by continued shipping troubles in the Red Sea and the second day of major protests at the major Libyan oil field Sharaha.
Greg Newman, chief executive of oil derivatives firm Onyx Capital Group, told City A.M. the price cuts indicate wider issues with how Saudi Arabia views its capacity to shift the currently-stymied battle for oil price control.
“Recent price cuts are a strong signal that the Saudis are losing confidence they can hold on to their long term cutting strategy without losing market share and undermining their efforts,” he said.
“The recent meeting showed us that Saudis are starting to push other members to share the burden, and now cutting prices so aggressively is likely a warning to others that their production strategy can shift to gaining market share over cutting production if they want.
“This threat is very real as the Saudis don’t do things by half measures, and a shift in strategy like this would seriously hurt other members with much lower prices very quickly, as we saw in April 2020.”
The U.S is also playing a controlling role in pricing dynamics, as is typical of late.
Data from the American petroleum Institute released last week showed a net build in crude oil inventories in the United States of just over 13m barrels throughout 2023.
Crude oil inventories in the Strategic Petroleum Reserve (SPR) continued their boon, rising by 1.1m barrels last week over the previous seven days.
