Oil drops over 3% after Saudi price cuts

The news: Oil prices fell overnight after sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output offset concerns that growing geopolitical tension in the Middle East would hit supply, Reuters reports.

The numbers: Brent crude futures tumbled 3.4% lower to USD76.12 a barrel, while US West Texas Intermediate (WTI) crude fell 4.1% to USD70.77 a barrel.

The context: On Sunday, rising supply and competition from rival producers prompted Saudi Arabia to cut the February official selling price of its flagship Arab Light crude to Asia to the lowest level in 27 months, which also raised concerns about global demand. Meanwhile, OPEC oil output rose in December as increases in Angola, Iraq and Nigeria offset continuing cuts by Saudi Arabia and other members of the wider OPEC+ alliance, a Reuters survey found. 2