Oil prices were on a downward trend Monday morning following Saudi Arabia’s decision to reduce the prices it charges its customers.
Saudi Aramco, the producer for the Middle Eastern energy giant, has decreased the price of its flagship Arab Light to Asia by $2 per barrel, setting it at $1.50 a barrel above the benchmark.
This reduction is larger than what many industry insiders anticipated and represents the most significant price cut in 13 months. Consequently, the February official selling price (OSP) of Saudi Arabia’s Arab Light crude to Asia has dropped to its lowest point in 27 months.
In addition, Aramco has reduced all prices for February delivery to Northwest Europe, the Mediterranean, and North America.
This move suggests that worries about a slowing economy negatively impacting oil demand are outweighing concerns about potential supply disruptions due to geopolitical tensions in the Red Sea.
This development has caused Brent crude, the oil benchmark, to fall by 1.2% at the beginning of the week, bringing it to $77.80 per barrel.