Oil drops sharply as Saudi price cuts overshadow Middle East tensions

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Oil prices dropped sharply on Monday as Saudi Arabia’s decision to cut its official selling price for oil exports in February overshadowed heightened tensions in the Middle East.

Brent crude, the international oil benchmark, fell 3.9 per cent to $75.70 a barrel after Riyadh over the weekend lowered its official selling prices to all regions. The equivalent US benchmark fell 4.7 per cent to $70.37 a barrel.

Lowering prices “is a signal that Saudi Arabia aims to remain competitive in the market” and is temporarily prioritising maintaining its market share, said Bjarne Schieldrop, a commodities analyst at SEB.

Brent peaked just below $100 a barrel in late September and has slipped since then despite the outbreak of war between Israel and Hamas. The price fell to just above $75 a barrel at the start of January before a small rebound as Houthi rebel attacks on commercial vessels in the Red Sea sparked concerns about a disruption to supplies.