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Peter Davis

An writer at FOMOdrive

  • Jan 08, 2024
  • 2 min read

Saudi Arabia collapsed oil, reducing prices for all regions

For the month of February, Saudi Arabia has decreased the cost of oil supplies to all areas of the globe.

During this time, the consumption of black gold has decreased seasonally.

The cost of oil decreased by over three dollars.

Bloomberg reported that Saudi Aramco, a state-owned company of Saudi Arabia, has decreased the prices of its February oil supplies to Asia, its biggest market, by $1.5–2 per barrel.

The cost of Arab Light crude oil was reduced for other parts of the globe, especially for northwestern Europe, the Mediterranean, and North America.

For a limited time, Saudi Arabia has reduced prices due to the seasonal decrease in oil usage. Refineries usually shut down for maintenance in February and March.

The supply of oil, commonly referred to as "black gold," is currently high due to increased production outside of OPEC+.

In December 2023, Bloomberg reported that the United States had upped its shale oil production compared to the previous year's predictions, while OPEC+ countries had seen a decrease in production.

US government forecasts predicted that oil production in the fourth quarter of 2023 would average 12.5 million barrels per day (b/d), however, it ended up being 13.3 million b/d.

On January 5, Reuters reported that Chinese consumers had been affected by Iran's decision to raise prices for its oil supplies, resulting in a decrease in Iranian oil exports to China.

The situation in the Middle East is being closely watched by traders, who are evaluating the potential risks to oil supplies.

ING Groep NV noted that, despite supply disruptions and tensions in the Middle East providing some support for oil, growth potential is limited in the absence of escalation in the region due to a comfortable balance of supply and demand in the first half of 2024.

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