Brent crude drops to $71 per barrel as Saudi Aramco announces deeper price cuts for Asian markets, raising concerns over global oil demand.
Global oil prices, tracked by Brent futures, have plunged to $71 per barrel, remaining below the critical $75 threshold. This drop follows Saudi Arabia’s oil giant, Aramco, announcing deeper-than-expected price cuts for its Asian customers. The move comes amid a global market grappling with weak demand and OPEC’s delay in production control efforts.
For January, Aramco has set the price of its flagship Arab Light crude at a premium of 90 cents per barrel above the regional benchmark. These reductions, aimed at stimulating demand in Asia, are more aggressive than analysts had anticipated.
Additionally, Aramco has lowered prices for the northwestern European and Mediterranean markets while keeping prices unchanged for North America, reflecting its strategic regional focus.
Despite these adjustments, Aramco continues to dominate the global oil landscape, boasting 2024 revenues of $494 billion, cementing its position as the world’s fourth-largest company by revenue.
OPEC’s Role in Price Fluctuations
Crude oil prices have been on a downward trend, falling nearly 9% from October highs of $80.35 per barrel. OPEC’s decision to downgrade its global oil demand forecast for 2024 has further fueled bearish market sentiment.
On October 14, OPEC cut its 2024 global oil demand growth estimate to 1.93 million barrels per day (bpd) from 2.03 million bpd. The organization also reduced its 2025 growth forecast to 1.54 million bpd, signaling prolonged challenges for the industry.
A London-based commodity analyst highlighted OPEC’s struggle to stabilize prices:
“With China’s crude demand still low, OPEC’s efforts are only managing to hold the Brent price floor at $70.”
Market Trends Reflect Continued Weakness
The crude oil market in 2024 has mirrored the bearish momentum carried over from the previous year.
- January 2024: Brent futures opened at $80.55 per barrel, experiencing modest gains through April.
- May 2024: Bearish pressure mounted, despite higher trading volumes of 6.4 million units.
- July to September 2024: Prices steadily declined, closing September at $71.70 per barrel.
- October 2024: A brief recovery was overshadowed by OPEC’s revised forecast on October 14.
By November 12, Brent prices had fallen to $71.89 per barrel, with Aramco’s latest price cuts for Asian customers further contributing to the decline.
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