Saudi’s Oil Cut Drags Prices Down By 0.58%

Crude oil price has fallen slightly after oil giant Saudi Arabia announced a $1 cut in its crude oil- Arab Light crude supplied to Asia on Sunday.

Brent prices slumped 0.53 per cent to trade at $72.06 on Monday by 11am WAT after the world’s largest oil producer announced a price cut on Sunday.

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U.S. West Texas Intermediate crude also went down by 0.51 per cent to $68.78 per barrel from $69.17 traded before the announcement.

Asia is Saudi’s biggest oil buyer, but the cut was larger than what investors expected, according to a Reuters poll among Asian refiners.

Saudi oil company Aramco announcement was principally driven by the weak recovery in the region’s oil demands.

Asia’s crude demand rose slightly in August, estimating crude imports by the region at 23.24m bpd in July, according to Refinitiv Oil Research,

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The country’s decision is also coming after the Organisation of Petroleum Exporting Countries and its Russia-led allies agreed to end the cut by adding 400,000bpd from August to December.

Analysts believe that Aramco may be encouraging Asian buyers under term contracts, instead of going to the spot market for cheaper prices.

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