Oil prices are down more than 2% on news of a sharp price cut by Saudi Arabia and a rise in production among members of the OPEC+ cartel.
The price of Brent crude oil, the international standard, is down 2.40% to $76.86 U.S. per barrel, while West Texas Intermediate (WTI) crude oil, the U.S. benchmark, has declined 2.72% to trade at $71.80 U.S. per barrel.
The drop comes on news that Saudi Arabia plans to cut the February official selling price of its Arab Light crude oil to Asia to its lowest level in 27 months.
At the same time, crude oil production among members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) rose in December.
Production increases in Iraq, Angola and Nigeria offset cuts by Saudi Arabia and other members of the OPEC+ cartel.
News of the price cut by Saudi Arabia and production increase offset supply concerns generated by escalating tensions in the Middle East, which had sent oil prices higher in recent days.
However, the December production increase comes ahead of a scheduled decline in OPEC+ production in 2024, and as Angola prepares to exit OPEC+.
Both moves are expected to lower January’s oil output around the world, say market observers.
At the same time, Libya’s National Oil Corporation announced on Jan. 7 a slowdown in production at its Sharara oilfield that can produce up to 300,000 barrels of crude per day.
Analysts remain divided on the direction of oil prices in the year ahead.
While some analysts are forecasting oil to rise above $90 U.S. a barrel as Middle East tensions escalate, others see crude prices falling to $60 U.S. a barrel on slowing demand, particularly in China which is in an economic slowdown.
