On Thursday, September 26th, oil prices dropped as Saudi Arabia, the world’s largest oil exporter, announced its decision to abandon its price target and increase production to boost market share.
At 10:23 Greenwich Mean Time, Brent crude futures fell to $72.19 per barrel, a decrease of $1.27 or 1.7%, while U.S. West Texas Intermediate crude dropped to $68.51 per barrel, down $1.18 or also 1.7%.
Earlier in the day, both prices had dropped by more than $2 per barrel at one point.
According to sources cited by the Financial Times on Thursday, Saudi Arabia is preparing to abandon its informal target of $100 per barrel for crude oil and is planning to increase production.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as OPEC+, have been cutting oil production in recent times to maintain high oil prices, led by Saudi Arabia.
However, with increased supply from other producing countries, particularly the United States, and sluggish demand growth in China, oil prices have fallen by nearly 6% so far this year.
Analyst Ole Hansen from Saxo Bank stated, “The prospect of additional supply from Libya and Saudi Arabia is a key driver of recent weakness in crude oil.”
In a statement released by the United Nations on Wednesday, it was mentioned that representatives from the divided eastern and western parts of Libya reached an agreement on the appointment of a central bank governor, which could help resolve the crisis over control of the country’s oil revenues and restore exports.
Data shows that Libya’s average daily oil exports in September were around 400,000 barrels, compared to over 1 million barrels per day in August.
(Reference: Reuters)