Following a Financial Times article stating that Saudi Arabia, the world’s largest crude exporter, will abandon its $100 price objective in order to increase output alongside OPEC members and allies in December, oil prices plummeted more than 3% on Thursday.
As of 10:19 a.m. CDT1323 GMT, U.S. West Texas Intermediate crude down $1.83, or 2.61%, to $67.86 per barrel, while Brent crude futures were down $1.73, or 2.36%, to $71.73 a barrel.
According to the Financial Times on Thursday, which cited sources familiar with the situation, Saudi Arabia is getting ready to give up on its unofficial price objective of $100 per barrel for crude as it prepares to raise output.
According to two OPEC+ sources who spoke with Reuters on Thursday, the producer group will proceed with increasing oil output in December because the plan’s impact will be minimal even if some members of the group decide to make deeper cutbacks in September and subsequent months to make up for their overproduction.
According to Price Futures Group senior analyst Phil Flynn, “they are overreacting to the news from FT.”
A request for response was not immediately answered by OPEC or the Saudi government’s communications office.
The Organization of the Petroleum Exporting Countries (OPEC+) has been reducing oil supply in order to support prices, as has been done with the help of the group’s allies, including Russia.
However, because to sluggish demand growth in China and rising supply from other manufacturers, particularly the U.S., prices have dropped by around 6% so far this year.
Ole Hansen, an analyst at Saxo Bank, stated that “the main reason behind the latest decline has been the expectation of more supply from Libya and Saudi Arabia.”
Delegates from Libya’s split east and west regions reached a consensus on the procedure for choosing a central bank governor on Wednesday, according to a statement from the UN. This move could help end the dispute over the country’s oil revenue, which has caused disruptions to exports.
According to shipping data, Libya’s crude exports averaged over 400,000 barrels per day (bpd) in September, compared to over a million bpd in August.
However, more losses were prevented by news of a fresh stimulus package from China.
Leading Chinese government officials acknowledged new issues and raised expectations in the market for additional stimulus on top of the measures announced this week when they promised on Thursday to use “necessary fiscal spending” to meet this year’s target of roughly 5% economic growth. China is the world’s largest importer of crude oil.
