Brent crude and the U.S. benchmark fell sharply on Thursday, dropping more than 2%, following reports that Saudi Arabia might boost oil production. Rumors suggest the Kingdom is ready to abandon its $100-per-barrel price target.
A report from the Financial Times, citing unnamed sources, indicated that Saudi Arabia is considering lowering its $100 target in order to pump more oil. The report also hinted that OPEC+ could collectively raise output starting in December.
As of 10:41 a.m. ET on Thursday, Brent crude was down 2.10%, trading at $71.92, marking a loss of $1.54 for the day. The U.S. benchmark, West Texas Intermediate (WTI), fell 2.27% to $68.11 per barrel, losing $1.58 on the day.
Despite these reports, Russian Deputy Prime Minister Alexander Novak stated earlier on Thursday that OPEC+ was not currently discussing any changes to its planned output cuts. The group had initially intended to start easing its 2.2 million barrels per day (bpd) production cuts in October, but this was postponed after oil prices plummeted in late August and early September. The cuts are now expected to be maintained until December 2024.
OPEC+’s September report projected lower-than-expected demand growth, contributing to the downward pressure on oil prices. This shift has dampened market sentiment, with traders now viewing the oil market as its most bearish since 2011.
If Saudi Arabia moves away from its $100-per-barrel price goal, it will have to accept lower prices to regain market share. The Kingdom has been producing around 9 million barrels per day for over a year, a strategy that has led to a loss of market share, both to non-OPEC+ producers and other members of the cartel.
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