Global oil prices, benchmarked by Brent futures, have dropped to $71 per barrel, dipping below the $75 mark following Saudi Aramco’s decision to cut prices for Asian markets. The move comes amid OPEC’s struggles to stabilize prices and declining global demand forecasts.
Aramco, Saudi Arabia’s state-owned oil giant and the fourth-largest company globally by revenue, reduced its Arab Light crude price for January to a premium of $0.90 per barrel above the regional benchmark, a deeper cut than analysts had anticipated.
While prices for customers in North America remain unchanged, Aramco also reduced its rates for buyers in Northwestern Europe and the Mediterranean. Despite these measures, Aramco maintains its commanding position in the oil market, generating $494 billion in revenue in 2024.
The price cut reflects broader challenges in the oil market. OPEC recently downgraded its global oil demand growth forecast for the fourth time this year:
- 2024 demand: revised to 1.93 million barrels per day (bpd), down from 2.03 million bpd.
- 2025 Demand: Lowered to 1.54 million bpd, down from 1.64 million bpd.
This ongoing downward revision has undermined OPEC’s ability to sustain Brent crude prices above $75 per barrel, with the organization now focusing on maintaining a floor at $70.
A London-based commodity analyst highlighted weak demand from China as a critical factor. “OPEC’s efforts are only managing to hold the Brent price floor at $70 due to subdued Chinese crude demand,” the analyst stated.
Price Trends in 2024
The oil market has faced significant challenges throughout 2024, marked by volatility and declining prices:
- January: Brent crude opened at $80.55 per barrel, supported by a modest uptrend.
- May: Bearish pressures began to emerge, with higher trading volumes but a lack of sustained gains.
- July–September: Prices steadily declined, closing September at $71.70 per barrel.
- October: A brief recovery was overshadowed by OPEC’s revised forecasts, leading to a continued downward trend.
By November 12, Brent crude settled at $71.89, reflecting the compounded effects of weaker demand, OPEC’s reduced forecasts, and Aramco’s price cuts.
As Aramco’s pricing strategy exerts further downward pressure on Brent futures, the global oil market faces persistent uncertainties. OPEC’s ability to stabilize prices amid weak demand and reduced forecasts will be critical in determining market trajectories in the months ahead.
