Oil Prices Plunge as Saudi Arabia Cuts Crude Rates and Trade Tensions Escalate

Highlights:

• Saudi Aramco cuts Arab Light crude price to Asia by US$2.30 per barrel
• Brent crude falls nearly 4% to US$63.21 at the time of writing, a four-year low
• OPEC+ surprise production hike and trade war fears weigh heavily on oil demand

Saudi Aramco Slashes Prices to Boost Market Share

Oil prices dropped sharply at the beginning of the week after Saudi Arabian Oil Company (TADAWUL: 2222), commonly known as Saudi Aramco, cut its flagship crude price by the largest margin in over two years. At the time of writing, global benchmark Brent crude had fallen nearly 4% to US$63.21 a barrel—a four-year low—while West Texas Intermediate (WTI) was trading at US$59.79.

The pricing shift comes as Saudi Aramco lowered its Arab Light crude for major Asian buyers by US$2.30 a barrel for May, a move seen as an aggressive attempt to retain market share amid growing global competition.

OPEC+ Output Hike Adds to Downward Pressure

The timing of the price cut followed an unexpected announcement by the OPEC+ alliance, which revealed a larger-than-anticipated boost in oil production. This decision caught traders off-guard and intensified concerns of oversupply, further contributing to the sharp drop in prices.

Crude markets are now navigating a complex environment shaped by both increased output and slumping demand prospects. Analysts suggest that this pricing strategy could trigger a new round of price wars among major producers, particularly in Asia, where demand is already showing signs of weakness.

Global Recession Fears Weigh on Commodity Markets

Beyond oil, the broader commodities market has also taken a hit. Industrial and agricultural goods, along with equities, have slumped due to escalating global trade tensions. The recent wave of tariffs between major economies is fuelling fears of a recession, weakening overall demand for energy and raw materials.

Investors remain cautious as market volatility increases, with crude oil firmly under pressure from both supply-side shocks and geopolitical uncertainty.

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