Oil deepens losses amid signs of weak demand

Oil drilling rigs

Oil deepened its losses today, Jan. 8, with Saudi Arabia’s reduction in the official selling price for its crude destined for Asia at the lowest level since November 2021. This overshadowed some of supply concerns due escalating geopolitical tensions in the Middle East.

Brent crude for March delivery slumped 3.35%, or $2.64, to close at $76.12 per barrel, after touching $75.26 during trading.

WTI crude for February delivery dropped 4.1%, or $3.04, to $70.77 a barrel, after touching $70.13 during the session.

Saudi Aramco announced that it had reduced the official selling price of Arab Light crude to a premium of $1.50 per barrel above the regional index for February, or a reduction of $2 per barrel, to record the lowest level in 27 months, Bloomberg reported.

“Amidst the weakening of the global economic outlook and the fading of seasonal demand strength, it has not come as much of a surprise that Saudi is cutting its OSPs so deeply,” said Serena Huang, lead Asia analyst at Vortexa Ltd. The move is key for defending the nation’s market share, she said.