tl;dr
Oil prices experienced a significant drop of over 3% after Saudi Arabia announced new price cuts and OPEC oil output increased. This downward pressure was caused by Saudi Arabia's reduction in the February official selling price of Arab Light crude to Asia, as well as an increase in OPEC oil output ...
**Summary**
Oil prices experienced a significant drop of over 3% after Saudi Arabia announced new price cuts and OPEC oil output increased. This downward pressure was caused by Saudi Arabia's reduction in the February official selling price of Arab Light crude to Asia, as well as an increase in OPEC oil output in December. Despite these factors, geopolitical tensions in the Middle East are expected to limit the downside. Analysts are pessimistic about the oil market's prospects but are also considering the potential impact of a global recession on crude oil prices.
**Introduction**
Oil prices were on the rise in the first week of 2024 amid escalating tensions in the Middle East, but the gains were lost on Monday after Saudi Arabia announced fresh price cuts. Moreover, OPEC oil output increased last month, further intensifying the downward pressure.
**BRENT, WTI DROP OVER 3%**
Oil prices tumbled over 3% on Monday after the world’s top exporter Saudi Arabia unveiled new price cuts, and OPEC output saw an increase, offsetting upward pressures stemming from supply concerns caused by Middle East tensions. Specifically, Brent crude prices were down 3.1% at $76.26 at the time of writing, while the West Texas Intermediate (WTI) stood at $71.26 after dropping 3.45%. The downswing comes after Saudi Arabia reduced the February official selling price of its flagship Arab Light crude to Asia, pushing it down to the lowest level in 27 months. The action followed growing supply and competition with rival producers.
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