Saudi Arabia Offers Price Discounts, Oil Under Further Pressure
Oil prices fell to a new five-month low after Saudi Arabia significantly cut its main crude oil prices. This move is the latest sign that the global oil market is beginning to face the pressure of oversupply.
WTI for August delivery fell slightly to close at US$68.55 per barrel. Meanwhile, Brent for September delivery fell 13 cents to close at US$71.99 per barrel in New York. This was one of the lowest levels since late February.
The main pressure came from Saudi Arabia's decision to grant a rare discount on Arab Light crude. This price cut was the largest in at least 26 years. This situation indicates that competition between producers is starting to intensify, especially after supply from the Persian Gulf returned to the market.
Negative sentiment was also reinforced by the OPEC+ decision over the weekend. Seven countries led by Saudi Arabia and Russia agreed to increase production quotas by 188,000 barrels per day for next month. Although the additional production has not yet fully reached the market, the decision signals that producers are willing to increase output when conditions begin to normalize. Previously, Brent had plunged around 30% in the second quarter after the United States and Iran agreed to an interim peace deal. The agreement paved the way for the restoration of shipping flows through the Strait of Hormuz, although traffic has not fully returned to normal and security risks remain.
On the other hand, the energy market still received some support from strong prices for refined products such as gasoline. Ukraine's attack on Russian energy infrastructure and tight global refinery capacity have kept crack spreads near their highest levels since June 2022. However, overall, the Brent and Dubai market structure shifting to a contango pattern indicates that short-term supply is starting to loosen. Although oil prices remain depressed, the 9-day RSI technical indicator shows prices are starting to enter oversold territory, so the possibility of a short-term rebound still needs to be monitored. (arl)
Source: Newsmaker.id
