Oil down suppressed by Saudi Arabia’s price cuts

Oil prices fell on Tuesday due to oversupply concerns following Saudi Arabia’s announcement to reduce its crude sales to Asian customers, although Libya’s oil disruptions limited further price losses.

The international benchmark crude Brent traded at $76.09 per barrel at 10.31 a.m. local time (0731 GMT), a 0.03% decline from the closing price of $76.12 a barrel in the previous trading session on Friday.

The American benchmark, West Texas Intermediate (WTI), traded at the same time at $70.73 per barrel, down 0.05% from Friday’s close of $70.77 per barrel.

Both benchmarks lost more than 3% on Monday, with Brent dropping to $75.26 and WTI to $70.13 after Saudi Arabia lowered official prices for its Asian customers upon requests for more competitive prices against other crude oil suppliers in the region.

The lowest prices for Arab light crude in 27 months raised oversupply fears in the Asian market amid strong demand in the region.

Meanwhile, fears over supply routes increased with the escalation in tension in the Middle East.

On Monday, the Israeli army announced that it had assassinated Hasan Okasha, a military leader for the Hamas group in Syria, alleging he was involved in firing rockets towards Israel.

Signs of demand weakness in the US, the world’s largest oil-consuming country, also suppressed crude prices.

The US labor force participation rate remained low, with many workers holding multiple jobs or shifting from full-time to part-time employment. Additionally, manufacturing sectors in both the US and the Eurozone came under pressure.

Limiting price downturns, Libya’s National Oil Corporation (NOC) declared a force majeure on Sunday at the Sharara oilfield in southern Libya amid fuel shortage protests.

”The closure has resulted in the suspension of crude oil supplies from the field to Zawiya terminal,” the NOC said in a statement.

The same oilfield closed on Jan. 3 after demonstrators stormed it in protest of fuel shortages in southern Libya.

Protesters call for the establishment of an oil refinery in the area, the preservation of the area’s crumbling roadways, and jobs for locals in the oil industry.

The El-Sharara oilfield produces more than 300,000 barrels of crude oil per day, forming roughly one-third of the oil-rich country’s production.

Libya holds Africa’s largest crude reserves, but years of conflict and violence in the country since the 2011 ouster of ruler Muammar Gaddafi have hobbled production and exports.

• National Oil Corporation (NOC)
• West Texas Intermediate (WTI)