How Oil Prices Dropped: A Look at Saudi Arabia’s Decision

Oil prices experienced a significant drop today, with a decrease of over 1% due to the substantial price reductions introduced by Saudi Arabia, a leading exporter, coupled with an increase in the Organization of the Petroleum Exporting Countries (OPEC) production. These factors successfully counterbalanced concerns about the growing geopolitical tension in the Middle East.

During early trading, Brent crude saw a fall of 1.09%, or 86 cents, standing at US$77.90 per barrel, and US West Texas Intermediate crude futures experienced a 1.15% decline, or 85 cents, landing at US$72.96 per barrel.

Saudi Aramco’s decision to cut its February OSPs reinforces the narrative of weak demand, Vandana Hari, founder of Vanda Insights, an oil market analysis provider, commented.

Prompted by rising supply and competition with other producers, Saudi Arabia reduced the February official selling price…