Oil Markets Face Setback as Saudi Arabia Shifts Strategy

Oil prices took a downturn on Thursday, reversing earlier gains, after reports surfaced that Saudi Arabia, the leading global crude exporter, was preparing to ease its focus on maintaining a price target, setting the stage for an increase in production.

By mid-morning, Brent crude had declined by $1.27, or 1.7%, to reach $72.19 a barrel, while U.S. West Texas Intermediate crude dropped $1.18, also down 1.7%, to $68.51 per barrel at 1023 GMT. Both benchmarks had earlier seen a steeper drop, losing more than $2 per barrel.

Saudi Arabia is moving away from its informal target of $100 per barrel for crude as it plans to raise production levels.

The OPEC+ alliance, led by Saudi Arabia and Russia, has been actively reducing output in an effort to support oil prices. Despite these efforts, oil prices have dropped almost 6% since the beginning of the year due to rising production from other suppliers, particularly the United States, and sluggish demand growth from China.

Saxo Bank analyst Ole Hansen attributed the latest decline to the expectation of increased supply from Libya and Saudi Arabia.

In a related development, a United Nations statement on Wednesday revealed that representatives from Libya’s divided factions agreed on steps to appoint a central bank governor, a move that could help resolve the country’s oil revenue disputes, which have hampered its exports. Data shows that Libya’s crude exports have averaged 400,000 barrels per day in September, a sharp drop from over 1 million bpd in August.

Have you read?
World’s Best Countries To Invest In Or Do Business.
World’s Most Startup-Friendly Countries.
World’s Best Countries For Quality of Life.
Largest Economies Europe In 2024.
GDP of the BRICS countries (2000 to 2028).