Saudi Arabia’s price cuts also presented another sign of weakness to markets, as the world’s biggest oil exporter grappled with a slowdown in demand, especially in Asia
Oil prices dropped in Asian trade on Monday after Saudi Arabia cut the prices of its Asian crude exports to more than two-year lows, although losses were limited as traders watched for any potential supply disruptions from the Middle East.
An escalation in the Middle East conflict, along with continued disruptions in shipping activity in the Red Sea, saw oil prices mark a strong first week of 2024.
But bigger gains were held back by a bounce back in the dollar, while concerns over demand also remained in play after another round of weak economic data from China.
Saudi Arabia’s price cuts also presented another sign of weakness to markets, as the world’s biggest oil exporter grappled with a slowdown in demand, especially in Asia.
Brent oil futures expiring March dropped 0.4% to $78.48 a barrel, while West Texas Intermediate crude futures declined 0.4% to $73.57 a barrel by 20:02 GMT.
While crude prices marked some gains over the past week, they were still nursing a more than 10% loss through 2023. High interest rates and slowing economic activity are expected to weigh on demand this year, while oil markets are also expected to remain largely well-supplied.
Saudi Arabia cut the price of its flagship Arab Light crude for Asian customers to a 27-month low, state producer Saudi Aramco said on Sunday.
Prices on February-loading Arab Light to Asia were slashed by $2 below the Oman/Dubai regional benchmark, while prices on crude supplied to parts of Europe and the Mediterranean were also slashed by $2 to just above the Brent benchmark.
The move comes as the country faces increased competition for its crude exports from limited demand and higher oil production by other Middle Eastern producers.
The price cuts also come nearly a month after new production cuts from the OPEC+ for 2024 largely underwhelmed markets. The cuts, along with record-high U.S. production, failed to convince markets that global oil supplies will tighten meaningfully in the first half this year.
