Crude oil prices slipped on Monday morning after Saudi Arabia announced sweeping price cuts over the weekend.
Brent crude fell as much as 1.5% in the morning to US$77.69 a barrel, while West Texas Intermediate crude was down as much as 1.9% at US$72.53.
This represented reductions of up to US$1.40 and US$1.16 per barrel respectively as markets opened on Monday.
State-owned producer Saudi Aramco had unveiled cuts by up to US$2 per barrel from February against regional benchmarks on Sunday, which coupled with an uptick in supply by the Organization of the Petroleum Exporting Countries (OPEC) in stemming prices.
Saudi’s cuts are set to stretch to all areas of the globe and include reductions of 2% compared to the Oman and Dubai benchmark’s January level, as well as against the ASCI index for the Gulf Coast.
Mediterranean and northern European prices will drop by between US$1.50 to US$2 a barrel against the ICE Brent crude benchmark's January figures, meanwhile.
Hargreaves Lansdown analyst Susannah Streeter commented that Sunday’s announcement came on fears of softening demand.
Prices had been fluctuating on concerns over conflict in the Middle East, she said, but “for now, focus has switched to signs of a dwindling appetite for oil globally”.
IG analyst Tony Sycamore added “it would be impossible to be anything other than bearish crude oil”, given the likes of higher inventories and production.
“However, that doesn't take into account the fact that geopolitical tensions in the Middle East are undeniably rising again which will mean limited downside,” he added.