Saudi Arabia Cuts Prices, Oil Under Pressure
Oil prices remain stuck in a downward trend after Saudi Arabia cut its main selling price for Asian buyers. Brent traded around US$72 per barrel in the late European session (July 6), while the market continues to seek new clues regarding shipping flows through the Strait of Hormuz.
Saudi Arabia made the largest price cut in years for Arab Light oil. It even offered a rare discount. This move signals that competition among producers is intensifying as supply from the Persian Gulf returns to the global market.
Pressure on oil prices also comes from the recovery of shipping traffic in the Strait of Hormuz. Several vessels connected to Japan were seen passing through the channel near Iran on Monday, while the US-protected corridor also showed signs of recovery. Previously, several vessels had turned around and taken a detour without a clear explanation.
Meanwhile, OPEC+ has again signaled an increase in supply. The seven countries, led by Saudi Arabia and Russia, have agreed to increase production quotas by 188,000 barrels per day for next month. Although these additional barrels have not yet fully reached the market, the decision demonstrates producers' willingness to increase output as conditions in the region begin to normalize.
However, risks in the Strait of Hormuz have not completely disappeared. RBC Capital Markets analysts assess that shipping traffic is likely to remain below pre-war levels due to persistent security threats and Iran's continued desire to maintain operational control of the waterway. This means that, despite improving supply, the market is not yet completely free from geopolitical risks.
Brent previously plunged around 30% in the second quarter after the United States and Iran agreed to an interim peace deal. Now, several Wall Street banks predict that oil prices are at risk of falling further, with Citigroup even seeing a potential for a move towards US$60 per barrel by year-end. Additional pressure is also evident in the Brent and Dubai market structures shifting to contango patterns, a sign that short-term supply is beginning to loosen.
Source: Newsmaker.id
