Oil prices plunged by nearly 4% early on Monday after Saudi Arabia signaled potentially weaker demand ahead by cutting the price of its oil across the board.
As of 9:22 a.m. ET on Monday, the U.S. benchmark, WTI Crude, was down by 3.75% to $70.83. The international benchmark, Brent Crude, had slumped by 3.53% on the day, at $75.87.
The move lower was triggered by Saudi Arabia, the world's top crude oil exporter, which cut the official selling prices (OSPs) for its crude loading in February to all regions. The cut for Asian importers was the deepest, at $2 per barrel for all grades that Saudi Arabia exports. The price cut is the deepest in 13 months but was in line with expectations, which also feature a softer Asian market for crude.
Concerns about oil demand overshadowed the continued risk to cargoes in the Red Sea and a force majeure in Libya, where the National Oil Corporation (NOC) has declared a force majeure on the country's largest oil field, Sharara, amid protests from local communities.
The force majeure entered into effect on Sunday, the NOC said on X, adding that it was negotiating with the protesters in a bid to resume the oil flow to the Zawya export terminal.
Sharara, which can produce up to 300,000 barrels of crude daily is a magnet for protesters and various political and paramilitary factions that want to make a point or prompt government action.
Large oil product builds in the United States, reported last week, and a survey showing that OPEC's oil production rose in December also weighed on oil prices early on Monday.
Moreover, traders and speculators have been increasingly bearish on crude oil in the past two weeks. Additional downward pressure on oil could come this week from the annual rebalancing of the two biggest commodity indexes - the Bloomberg Commodity Index and the S&P GSCI.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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