Oil prices fall to five-month low on Saudi crude discount, OPEC+ output hike
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The news: Oil prices slid to fresh five-month lows after Saudi Arabia made its biggest cut to crude prices in at least 26 years.
West Texas Intermediate crude settled below USD69 ($99) a barrel, in the latest sign of a supply glut in global markets.
The context: Saudi Aramco will slash the price of its flagship Arab Light crude by USD11 a barrel next month, taking it to USD1.50 below the regional benchmark, adding to signs of intensifying competition as oil supplies continue to flow from the Persian Gulf.
This move follows OPEC+‘s decision over the weekend to approve another modest increase in production quotas for August, with seven members led by Saudi Arabia and Russia agreeing to raise output by 188,000 barrels a day.
Brent crude fell 30% in the second quarter after Washington and Tehran reached an interim peace agreement, paving the way for the resumption of shipping through the Strait of Hormuz.
What they said: “We think there is minimal appetite for a supply-driven price washout,” RBC Capital Markets analyst Helima Croft said.
“Hormuz transits will remain well below prewar levels given the enduring security threats and Iran’s insistence on retaining operational control,” she added.
The source: Bloomberg
