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LONDON: Oil costs fell by greater than 2% on Monday on sharp price cuts by high exporter Saudi Arabia and an increase in OPEC output, offsetting provide considerations generated by escalating geopolitical rigidity within the Middle East.
Brent crude slid 2.2%, or $1.74, to $77.02 a barrel by 1024 GMT whereas U.S. West Texas Intermediate crude futures shed 2.3%, or $1.73, to $72.08.
Both contracts climbed greater than 2% within the first week of 2024 on intensifying geopolitical threat within the Middle East after assaults by Yemeni Houthis on ships within the Red Sea.
On Sunday rising provide and competitors with rival producers prompted Saudi Arabia to chop the February official promoting price (OSP) of its flagship Arab Light crude to Asia to the bottom stage in 27 months.
“Oil watchers are rightly questioning that the kingdom’s cut is not only aimed at quelling interference from non-OPEC supply but from its very own cartel membership,” stated John Evans, of oil dealer PVM.
A Reuters survey on Friday discovered that OPEC oil output rose in December as will increase in Iraq, Angola and Nigeria offset persevering with cuts by Saudi Arabia and different members of the broader OPEC+ alliance.
The increase got here forward of additional OPEC+ cuts in 2024 and Angola’s exit from OPEC, that are set to decrease January output and market share.
“If we were just to focus on the fundamentals, including higher inventories, higher OPEC/non-OPEC production and a lower than expected Saudi OSP, it would be impossible to be anything other than bearish on crude oil,” stated IG analyst Tony Sycamore.
“However, that doesn’t take into account the fact that geopolitical tensions in the Middle East are undeniably rising again, which will mean limited downside.”
U.S. Secretary of State Antony Blinken held extra talks with Arab leaders on Monday as a part of a diplomatic push to cease the conflict in Gaza from spreading additional. The battle has already sparked violence within the Israeli-occupied West Bank, Lebanon, Syria and Iraq, and likewise led to Houthi assaults on Red Sea transport lanes.
“The Red Sea tensions are the only counterweight, albeit a relatively weak and intermittent one, to crude prices succumbing to bearishness over expectations of softening global demand and rising inventories,” stated Vandana Hari, founding father of oil market evaluation supplier Vanda Insights.
Another price-supportive issue was a power majeure by Libya’s National Oil Corporation on Sunday at its Sharara oilfield, which might produce as much as 300,000 barrels per day.
Brent crude slid 2.2%, or $1.74, to $77.02 a barrel by 1024 GMT whereas U.S. West Texas Intermediate crude futures shed 2.3%, or $1.73, to $72.08.
Both contracts climbed greater than 2% within the first week of 2024 on intensifying geopolitical threat within the Middle East after assaults by Yemeni Houthis on ships within the Red Sea.
On Sunday rising provide and competitors with rival producers prompted Saudi Arabia to chop the February official promoting price (OSP) of its flagship Arab Light crude to Asia to the bottom stage in 27 months.
“Oil watchers are rightly questioning that the kingdom’s cut is not only aimed at quelling interference from non-OPEC supply but from its very own cartel membership,” stated John Evans, of oil dealer PVM.
A Reuters survey on Friday discovered that OPEC oil output rose in December as will increase in Iraq, Angola and Nigeria offset persevering with cuts by Saudi Arabia and different members of the broader OPEC+ alliance.
The increase got here forward of additional OPEC+ cuts in 2024 and Angola’s exit from OPEC, that are set to decrease January output and market share.
“If we were just to focus on the fundamentals, including higher inventories, higher OPEC/non-OPEC production and a lower than expected Saudi OSP, it would be impossible to be anything other than bearish on crude oil,” stated IG analyst Tony Sycamore.
“However, that doesn’t take into account the fact that geopolitical tensions in the Middle East are undeniably rising again, which will mean limited downside.”
U.S. Secretary of State Antony Blinken held extra talks with Arab leaders on Monday as a part of a diplomatic push to cease the conflict in Gaza from spreading additional. The battle has already sparked violence within the Israeli-occupied West Bank, Lebanon, Syria and Iraq, and likewise led to Houthi assaults on Red Sea transport lanes.
“The Red Sea tensions are the only counterweight, albeit a relatively weak and intermittent one, to crude prices succumbing to bearishness over expectations of softening global demand and rising inventories,” stated Vandana Hari, founding father of oil market evaluation supplier Vanda Insights.
Another price-supportive issue was a power majeure by Libya’s National Oil Corporation on Sunday at its Sharara oilfield, which might produce as much as 300,000 barrels per day.
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