US benchmark West Texas Intermediate (WTI) for December delivery fell 59 cents to $78.19 in afternoon trade, below its lowest settlement point since June 2012.
Brent crude for December was down 69 cents at $84.09.
WTI dropped $1.76 in late New York trade Monday while Brent plunged $1.08 in London.
“Oil prices suffered another body blow… after it was reported that Saudi Arabia cut its selling price to the US possibly in a bid to compete with US shale oil,” Singapore’s United Overseas Bank said in a commentary.
Dow Jones Newswires said Monday that 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.
Saudi Arabia raised the prices for its oil in other locations, including Asia, where the country has cut its prices for four straight months, Dow Jones Newswires reported.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said the price cut “clearly reiterates the fragile nature of the crude market now as major players try to survive in this oversupplied market”.
“We expect Iraq and Iran to follow suit shortly in the coming weeks and that could very well spark another sell-off,” he said.
The move by Saudi Arabia comes ahead of a key production meeting of the Organisation of the Petroleum Exporting Countries (OPEC) on November 27 in Vienna.
The cartel is expected to deliberate on whether to trim its current 30 million barrels per day output to prop up prices.
Saudi Arabia, long the world’s key producer, has wrestled with its options of cutting output to shore up prices or reducing prices to defend its market share.
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