Saudi Arabia has significantly reduced the price of its flagship oil for the first time in two years, a consequence of the escalating trade war and growing fears of a global recession and demand for energy resources, Bloomberg reports.
This is reported by Finway
Oil prices continue to decline: on April 7, Brent crude fell nearly 4% to $63 per barrel, the lowest level in the past four years. Later, prices rose to $64, while West Texas Intermediate approached $60. The largest oil company, Saudi Aramco, has lowered the price of Arab Light oil for its main buyers in Asia for May, just a few days after OPEC+ announced an unexpected increase in production.
“Oil prices are accelerating their decline. Markets are starting the week still engulfed in panic. No one dares to pick a bottom and stand in the way of the tsunami of selling,” said Vandana Hari, founder of Vanda Insights in Singapore.
At the same time, the drop in oil prices is exacerbated by the unexpected decision of the OPEC+ alliance to increase production, leading to fears of a global surplus. Sentiment in the stock markets is also deteriorating: Goldman Sachs has cut its oil price forecasts for the second time this week. They expect Brent to fall to $62 per barrel by December, which is $4 lower than the previous forecast. This reduction is a result of a revision of GDP and the forecast of stagnation in the U.S. economy.
Additionally, U.S. President Donald Trump has pressured OPEC+ to lower oil prices to reduce inflation and increase pressure on Russia in the context of the war against Ukraine. Saudi Arabia has also lowered prices for the U.S. and Europe, although the reduction was smaller than for Asian buyers.
“By default, all risky assets will continue to decline until Trump says or signals something that will make investors stop and reassess their recession fears,” noted Vandana Hari.