Impending Saudi Output Increase Spooks Traders, Oil Sheds 2%

Meanwhile, Russia rejects bearish prognostications and predicts big global rise in demand: File Image/Pixabay

Oil's chronic downward trajectory continued on Thursday with a more than 2 percent slide, driven by reports   that Saudi Arabia was committed to an output increase, thus exacerbating what is perceived to be waning global demand.

After the Financial Times disclosed that the Saudis are giving up their $100 price target in preparation for raising output, along with Organization of the Petroleum Exporting Countries (OPEC) members and allies in December, Brent as of 1323 GMT fell $1.73, or 2.36 percent, to $71.73 per barrel.

West Texas Intermediate fell $1.83, or 2.61 percent, to $67.86 per barrel.

Sources with knowledge of the matter said Saudi officials are ready to increase production in December even if the move results in a prolonged period of low oil prices.

A/S Global Risk Management said in a report, "There is no room for more OPEC+ oil on the market if the cartel wants an oil price close to $80 in 2025; we assess that the Saudis are trying to put significant pressure on the quota cheaters."

Ole Hansen, analyst at Saxo Bank, added, "The prospect of additional supply from Libya and Saudi Arabia has been the main driver behind the latest weakness," referring to Libya's divided factions agreeing to the appointment of a central bank governor, which could solve the problem over control of the country's oil revenue that has disrupted exports.

As for factors that could influence oil trading before the end of this week, Hurricane Helene was reportedlyi gaining power as it headed toward Florida, where it is forecast to make landfall Thursday evening or early Friday.

Oil and gas companies have evacuated some Gulf of Mexico workers and suspended about 29 percent of oil production.

In other oil news on Thursday, Russia's First Deputy Energy Minister Pavel Sorokin bucked prevailing analytical wisdom by stating that his country expects global oil demand to grow by at least 5 percent from current levels to 2050, with demand growth of up to 7 million barrels per day (bpd) by 2030.

He added that Russia is ready to provide additional crude volumes when needed.