The cost of global oil, measured by Brent crude futures, has dropped to $71 per barrel, staying under the important $75 mark. This drop happened after Saudi Aramco, the world’s fourth-biggest company based on income, said it would lower prices for its Asian customers more than people expected. This decision shows the difficulties in keeping global oil prices steady, with weak demand and choices made by the Organization of the Petroleum Exporting Countries (OPEC) about how much oil to produce.
For January, Saudi Aramco set the price of its main Arab Light crude oil at 90 cents per barrel above the usual regional price. This change is a big reduction and is meant to keep its prices competitive in Asia, which is the world’s biggest area for oil imports. Similar price cuts were also made for customers in northwestern Europe and the Mediterranean, but prices for North America stayed the same.
The cuts come after OPEC took too long to deal with overproduction, which has pushed prices lower. Brent crude oil has fallen almost 9% from its peak in October, when it was $80.35 per barrel. This drop is made worse by OPEC’s recent lower estimates for global oil demand.
On October 14, OPEC reduced its 2024 global oil demand growth estimate to 1.93 million barrels per day (bpd), down from an earlier forecast of 2.03 million bpd. The group also lowered its 2025 demand growth projection to 1.54 million bpd, showing worries about slower global economic growth, especially in China.
