Sep 26 2024: Oil prices tumbled on Thursday, reversing earlier gains, following reports that Saudi Arabia, the world’s largest crude exporter, is set to raise output, abandoning its unofficial $100 per barrel price target.
As of 07:40 GMT, Brent crude futures fell by $1.89, or 2.57%, to $71.57 per barrel, while U.S. West Texas Intermediate crude dropped by $1.83, or 2.63%, to $67.86 per barrel.
According to the Financial Times, Saudi Arabia is preparing to shift away from its previous price target in anticipation of increasing production, citing sources familiar with the situation.
“The recent potential return of Libyan oil supply, combined with today’s report on Saudi Arabia’s lowered price target due to expected output increases, has taken the momentum out of the oil market, which had been boosted earlier this week by the People’s Bank of China’s (PBOC) stimulus measures,” noted Tony Sycamore, market analyst at IG.
On Wednesday, the United Nations announced that representatives from Libya’s eastern and western regions had agreed on the process for appointing a new central bank governor. This development could help resolve ongoing disputes over control of the country’s oil revenue, which has hindered exports.
“Any resurgence in Libyan oil production would hit an already oversupplied market, further weighed down by weak demand in both the U.S. and China,” said ANZ Research in a note.
Russia, meanwhile, indicated that it does not intend to flood the market with oil. Deputy Energy Minister Pavel Sorokin stated on Thursday that production costs are expected to rise as extraction becomes more challenging. Sorokin also mentioned that Russia’s oil production target is set at 540 million metric tons annually by 2030, though supply levels could be adjusted if necessary.
In China, government officials pledged on Thursday to implement “necessary fiscal spending” to meet this year’s economic growth target of around 5%, raising hopes for additional stimulus measures on top of those announced earlier this week.
