Oil prices plunge on back of Saudi price cuts

Oil prices plunge on back of Saudi price cuts

Monday, November 3, 2014 10:45 pm

Oil prices plunged late in the day Monday after reports that Saudi Arabia was slashing its export prices for the US market while hiking them for Asia.

Dow Jones Newswires said Riyadh had lowered its December prices for oil shipped to the United States, where its market share has been hit hard by the rise in domestic production from shale deposits.

The price cut suggests “that the kingdom is trying to compete with US shale oil,” Dow Jones said.

“Saudi Arabia raised the prices for its oil in other locations, including Asia, where the country has cut its prices for four straight months,” it reported.

The New York benchmark oil price, West Texas Intermediate for December delivery, dropped $1.76 to $78.78 a barrel, its lowest closing price since June 2012.

European benchmark Brent oil for December meanwhile dropped $1.08 to $84.78 a barrel at the end of London trade.

Oil prices have been on a general slide as consumption growth has slowed with the world economy and output has picked up, especially in the United States.

The Saudis, long OPEC’s and the world’s key producers, have wrestled with their response between the options of cutting output to shore up prices, and chopping prices to defend their market share.

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