Oil prices continued to decline on Monday, after Saudi Arabia, the world’s largest exporter, cut crude prices for Asia at the weekend.
Brent crude futures for November were down 57 cents, or 0.8%, at $72.04 a barrel by 0101 GMT.
US West Texas Intermediate crude for October recorded $68.73 a barrel, down 56 cents, or 0.8%.
Saudi Arabia lowers oil prices
Saudi Arabia, the world’s largest oil exporter, cut prices for all types of crude oil for Asian customers in October versus September, but left selling prices for crude to Northwest Europe and the United States unchanged.
These deep price cuts come as lockdowns across Asia to combat the highly contagious delta strain of the coronavirus have curbed fuel demand in the region.
Global oil supplies have also begun to increase as the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, increased production by 400,000 barrels per day per month between August and December.
The oil giant Saudi Aramco, for the first time in four months, reduced the official selling price of Arab Light crude for delivery to Asia in October to a premium of $1.70 per barrel over the average price of Oman and Dubai crude, according to an official pricing document. The bonus was $3 in September.
The $1.30 price cut for October versus September was the biggest monthly cut in a year and surprised the market as buyers had been expecting prices to drop by 20-40 cents a barrel, in line with changes in benchmark prices in Dubai.
Reuters quoted oil traders in Asia as saying that it is likely that the significant reductions in prices will boost demand for Saudi crude.
Aramco set the official selling price for its Arab Light crude to Northwest Europe at a discount of $1.70 a barrel from Brent on the Intercontinental Exchange in October, unchanged from September, and there was no change in the official selling price to the United States at a premium of $1.35 a barrel. Above the Argus index for high sulfur ores.