Oil prices extended their losses, falling nearly $1 on Monday after the world’s largest exporter, Saudi Arabia, lowered its crude oil contract prices for Asia over the weekend.
State oil giant Saudi Aramco announced on Sunday that it will cut its October official selling prices (OSP) by at least $1 per barrel for all crude oil grades sold to Asia, its largest purchasing region. According to Asian refiners, the price cuts were larger than expected.
The decline in OSPs for Asia signals softer demand and potentially higher supply.
A military spokesman for the Iran-linked Houthi group in Yemen said it attacked Saudi Aramco oil facilities in Ras Tanura in the eastern part of the kingdom and facilities in other locations, including Jeddah on the Red Sea coast, with drones and ballistic missiles.
Saudi Arabia said on Saturday it intercepted a ballistic missile and armed drones fired by Yemen’s Houthi group into the oil-rich Eastern Province, injuring two children by the resulting shrapnel.
Global oil supply is increasing as the Organization of the Petroleum Exporting Countries and its allies increase production by 400,000 barrels per day between August and December.
Brent crude futures for November fell 98 cents, or 1.4%, to $71.63 as of 0613 GMT, while US West Texas Intermediate crude for October fell 95 cents, or 1.4%, to $68.34 a barrel.
Oil is likely to remain under pressure, given that OPEC+ continues its monthly production ramp-up despite weak data from China and the US adding to slowdown fears and Saudi Arabia seeking market share in the region.
Crude oil futures fell on Friday after a weaker-than-expected US jobs report pointed to an uneven economic recovery that could mean slower fuel demand amid the resurgent epidemic.
Losses were capped by concerns that U.S. supply would remain limited in the wake of Hurricane Ida. Nearly 1.7 million barrels of oil and 1.99 billion cubic feet of natural gas production went offline, with power outages preventing some refineries from continuing their operations, according to government data released Friday.
The US government is supplementing the market with crude oil from strategic oil reserves as production on the US Gulf Coast tries to recover.
The hurricane also prompted US energy companies to cut the number of oil and gas rigs operating for the first time in five weeks last week, according to data released Friday by Baker Hughes. The number of oil rigs fell by the most since June 2020.
U.S. Gulf Coast energy companies received support from the reopening of ports on Saturday and the resumption of oil refineries that were shut down by Hurricane Ida, but damage to key facilities still curtails oil production.
Without power for nearly a week, Louisiana residents and area businesses are struggling to find fuel to power them.
Meanwhile, a mile-long brownish-black slab has been seen spreading in coastal waters about two miles offshore of Port Fourchon, Louisiana, an oil and gas hub, according to U.S. National Oceanic and Atmospheric Administration satellite images reported Wednesday by the Associated Press. Divers are trying to locate the source of the oil spill reported in the Gulf after Hurricane Ida.
