Oil prices continued their decline for a second consecutive day, driven by reports that Saudi Arabia is preparing to boost oil production in December, and Libya is set to revive some of its crude output.
West Texas Intermediate (WTI) crude fell nearly 3%, settling below $68 a barrel, while global benchmark Brent slipped to just above $71 a barrel. Saudi Arabia is reportedly willing to abandon its unofficial $100-per-barrel target in an effort to regain market share, according to a report by the Financial Times, citing sources familiar with the country’s position.
In Libya, rival factions from the eastern and western regions reached an agreement to appoint Naji Issa as the new governor of the central bank, a move that is expected to resolve a leadership impasse that had disrupted the country’s oil exports. Libya’s eastern-based government has also committed to reopening the nation’s oil fields soon, according to a televised statement by Stephanie Koury, the United Nations’ envoy to Libya.
The potential increase in oil supply from Saudi Arabia and Libya comes at a time when the global market is already grappling with oversupply concerns. Earlier this month, oil prices reached their lowest levels since 2021, partly due to the prospect of additional production from OPEC+ countries and China’s struggling economy. The International Energy Agency has warned that global oil markets will face an oversupply in 2024, even without extra production from OPEC+ members, driven by rising output from non-OPEC+ producers.
“There’s no room for more OPEC+ oil on the market if the cartel wants to maintain prices near $80 a barrel in 2025,” analysts at A/S Global Risk Management stated in a report. They also noted that Saudi Arabia appears to be pressuring countries within OPEC+ that have been exceeding their production quotas.
Meanwhile, geopolitical tensions in the Middle East continue to add uncertainty to the market. The US, European Union, and several Middle Eastern powers have proposed a three-week ceasefire between Israel and Hezbollah in Lebanon, aiming to clear the way for peace talks and prevent a wider conflict. However, Israel has continued to bombard Hezbollah targets in Lebanon and has rejected any ceasefire proposals.
Elsewhere, in the Gulf of Mexico, oil and gas companies evacuated workers from offshore platforms and shut down approximately 29% of oil production due to the threat posed by Hurricane Helene, which has strengthened into a major storm.
