Oil Plunges Over 2% on Rumor Saudis Ready To Increase Output

Brent crude and the U.S. benchmark shed well over 2% on Thursday on mainstream media rumors that Saudi Arabia is planning to unleash more oil on the market, with the Kingdom willing to give up its $100-per-barrel price target.

According to a Financial Times report earlier in the day citing unnamed sources, Saudi Arabia is willing to reduce its $100 price target to pump more oil, and OPEC+ is preparing to increase output collectively in December.

At 10:41 a.m. ET on Thursday, Brent crude was trading down 2.10% at $71.92, for a loss of $1.54 on the day. The U.S. benchmark West Texas Intermediate (WTI) was trading down 2.27% at $68.11, for a loss of $1.58 per barrel on the day.

Russian Deputy Prime Minister Alexander Novak said earlier on Thursday that OPEC+ was not discussing any proposals for changes to the expanded cartel’s output cuts. OPEC+ was originally expected to begin unwinding part of its 2.2 million bpd of oil output cuts beginning in October this year. That has since been delayed due to the oil price crash in late August and early September. OPEC+ delayed the start of the unwinding of the cuts by two months until December 2024.

The cartel’s monthly report for September saw a reduced demand growth outlook, which has put heavy downward pressure on oil prices. The monthly report has turned bulls into bears, with traders now appearing to view the market as its most bearish since 2011.

Foregoing its $100-per-barrel price target will mean that Saudi Arabia will have to accept low oil prices in order to regain market share.

Saudi Arabia has been pumping some 9 million barrels per day (bpd) of crude for over a year, without veering from its target–a move that has cost it market share not only from non-OPEC+ producers but also from within the cartel itself.