(New York) Oil prices fell on Monday, driven by the offensive by Saudi Arabia, which brutally lowered its prices to reposition itself in the face of competition in a market without certainty.
The price of a barrel of North Sea Brent for March delivery closed down 3.34%, at $76.12.
As for a barrel of American West Texas Intermediate (WTI), due in February, it fell 4.11% to $70.77.
According to a document communicated to AFP by Aramco, the Saudi national company plans to reduce its prices by two dollars per barrel in February for its Asian customers.
The proposed rate is now only $1.5 per barrel higher than that of Dubai, the benchmark for the Asian market, the smallest difference since November 2021.
Susannah Streeter, of Hargreaves Lansdown, said it was a sign that “Saudi Arabia is seeing demand slowing”.
“It looks like a warning shot, probably aimed at other producers, whether Russia, the United States, but also those who refused production cuts [during the last meeting of the Organization of Exporting Countries oil] or who are not meeting their reduction commitments,” commented Robert Yawger of Mizuho.
Until now, the Kingdom had demonstrated flawless discipline, contracting its production by around two million barrels per day since the fall of 2022 to support prices, when others balked.
“The Saudis are tired of doing all the work,” according to Robert Yawger.
This pivot is reminiscent of that of 2014, which saw Saudi Arabia suddenly flood the market, in particular to counter the emergence of the United States and the shale oil boom. The price of WTI eventually fell to $26 in early 2016.
“I don’t believe in a price war, but the hypothesis is more plausible today than it was on Friday,” argued Robert Yawger. “They are losing patience. »
These developments come against a backdrop of deterioration in the global economic situation. According to JPMorgan analysts, demand grew in December at its weakest rate in nine months.
Beyond that, the Saudi turnaround is a bad signal for the unity of OPEC and its allies in the OPEC agreement.
In addition to Angola’s defection, the cartel must contend with the influx of Iranian barrels, Iraq’s desire to increase its production and “Russia hosing everyone it can, particularly India and China”, according to Robert Yawger, for whom OPEC “is cracking”.
