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Oil Prices Drop as Saudi Arabia Slashes Crude Prices

Investors Increase Short Bets on Brent and WTI Crude Oil Amid Market Uncertainty

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The Aramco (Saudi national oil company) offshore oil rig "Marjan 2" in the Persian Gulf on March 2003 in Persian Gulf, Saudi Arabia.
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Overview

  • Saudi Arabia has slashed its crude oil prices, leading to a significant increase in short bets on the price of Brent and WTI crude oil.
  • Major commodities funds are expected to start selling US crude futures contracts to rebalance as the new year gets underway.
  • Saudi Arabia's recent price cut could indicate that the kingdom sees lower crude demand or is potentially trying to counter the West's booming crude production by waging a 'market share war'.
  • Oil prices dropped over 3% on Monday, with Brent trading around $76 a barrel and West Texas Intermediate crude trading around $71 a barrel.
  • Despite geopolitical tensions in the Middle East, the overall oil market leanings remain bearish, pointing to prices in the region of $70-75 per barrel for the first half of 2024.