Investing.com – Oil prices fell sharply on Thursday after Saudi Arabia reportedly will give up its unofficial price target of $100 as it looks set to press ahead with an OPEC+ plan to boost production in December.
At 2:30 PM ET (1830 GMT), the stock fell 2.7% to $70.97 per barrel, while falling 2.9% to settle at $67.67 per barrel.
Saudi Arabia is preparing to increase oil production in December
The Financial Times reported that Saudi Arabia, the world’s largest oil exporter, is preparing to abandon its unofficial $100 per barrel price target for crude oil as the country prepares to increase production.
The Organization of the Petroleum Exporting Countries, traditionally led by the Saudis, along with the group’s allies including Russia, collectively known as OPEC+, have cut oil production to support prices.
Earlier this month, the group decided to push back plans to phase out additional cuts of 2.2 million barrels per day over the course of a year, by two months through December.
Sources told the FT that the OPEC+ OS plans to press ahead with plans to increase oil production in September despite the recent drop in oil prices, as the impact was likely to be blunted by some commitments from members to make deeper cuts to compensate for excess production. of the agreed quota.
Also adding to the rise in supply concerns, media reports say delegates from Libya’s eastern and western factions had agreed on the process of appointing a new central bank governor – a move expected will resolve a crisis that shut down most of the country’s oil production.
Production disruptions in the country had knocked output of at least 1 million barrels per day offline, with any resumption of production likely to herald less tight markets.
US inventories shrink more than expected
News that more supply may be coming to the market has overshadowed increased tensions in the Middle East as Israel continued its offensive against Hamas and Hezbollah, raising the risk of supply from the oil-rich region.
Additionally, data released on Wednesday showed a substantially larger-than-expected decline of 4.47 million barrels (mb).
and inventories also shrank, indicating that US demand remained strong.
The draw came amid some disruptions in U.S. oil production, mainly due to adverse weather conditions in the Gulf of Mexico. Production in the region was taken offline due to a hurricane earlier in September and is expected to face further disruptions as Hurricane Helene rips through the Gulf this week.
Still, prices continued to rise sharply this week, especially after top importer China announced a series of stimulus measures aimed at supporting growth. US oil inventories also shrank more than expected, creating a tight outlook for markets.
(Peter Nurse, Ambar Warrick contributed to this article.)
