Following Saudi Arabia’s decision to deeply slash contract prices for Asia over the weekend, oil prices fell by $1 earlier this week. While futures fell by 98 cents, a margin of 1.4%, U.S. West Texas Intermediate crude was down 95 cents, or 1.4%. This brings the prices down to $71.63 a barrel and $68.34 per barrel respectively.
Saudi Aramco, the state’s public petroleum and natural gas supplier, notified customers on Sunday that it would cut October official selling prices for all crude grades sold in Asia. The $1 per barrel deduction is larger than most analysts expected.
The Organization of the Petroleum Exporting Countries and their allies (OPEC+) has decided to commit to the increase in global oil supply, agreeing to raise output by 400,000 barrels per day between August and December.
Jeffrey Halley, a senior market analyst for Asia Pacific at brokerage OANDA, expressed concern at this recent decision by OPEC+, explaining: “Given that OPEC+ is continuing its plan to raise production monthly, despite weak data from China and the U.S. raising slowdown fears, and Saudi Arabia looking for market share in the region, oil is likely to remain under pressure.”
