On Monday the global stock indexes rose. The indexes rose with gains in the U.S. tech-related shares causing a jump in the Nasdaq of at least more than 2%. Meanwhile, the top exporter of Saudi Arabia made a price cut dropping the U.S. oil prices by 4%, overshadowing the Middle East tension.
Saudi Arabia decided to cut its official selling price(OSP) for oil exports in February which led to a sharp drop in oil prices. The international oil benchmark, Brent crude, fell 3.9 per cent to $75.70 a barrel and the equivalent US benchmark fell 4.7 per cent to $70.37 a barrel. Saudi Arabia firmly decided to cut the oil prices exported to Asia by $2 a barrel. This decision was taken as a signal by the investors that Saudi Arabia, the world’s biggest exporter is facing problems in selling all of its production.
On Sunday Saudi Arabia cut the February Official Selling Price(OSP) of its flagship Arab Light Crude to Asia to the lowest level in 27 months. The decision by Saudi Arabia may be taken as a sign that the country would be unwilling and single-handedly sacrifice its market share to support the prices.
Bjarne Schieldrop, a commodities analyst at SEB said “Saudi Arabia aims to remain competitive in the market” and was temporarily prioritizing maintaining its market share.
Analysts said the decision of Saudi Arabia to lower the prices for North America, Asia, the Mediterranean and north-west Europe reflects Riyadh’s anticipation of softening global demand and robust growth in US supply. Still, they are split on whether oil prices will escalate, slide or trade in the upcoming months.