Oil declines by more than 1%, affected by the reduction in Saudi crude prices

Oil prices experienced a decline of more than one percent on Monday, driven by significant cuts in the official selling prices for Saudi crude and an upswing in OPEC production. Despite escalating geopolitical tensions in the Middle East, these factors weighed more heavily on market sentiment.

As of 0344 GMT, Brent crude registered a 1.09 percent decrease, amounting to 86 cents, with a barrel priced at $77.90. Simultaneously, West Texas Intermediate crude witnessed a 1.15 percent drop, equivalent to 85 cents, settling at $72.96 per barrel.

In the initial week of 2024, both commodities had surged by over two percent as investors returned from holidays, with a focus on geopolitical risks in the Middle East following Houthi attacks on ships in the Red Sea.

However, a Reuters poll indicated that OPEC production had risen by 70,000 barrels per day in December, reaching 27.88 million barrels per day. This increase, coupled with competitive pressures from rival producers, overshadowed concerns about escalating geopolitical tensions and contributed to the decline in oil prices.

Responding to increased supplies and heightened competition, Saudi Arabia took action on Sunday by reducing the official selling price of its Arab Light crude to Asia, marking the lowest level in 27 months. This move further impacted the downward trajectory of oil prices.