Oil Extends Sharp Drop on Prospect of More Saudi, Libyan Supply

Oil fell for a second day as Saudi Arabia was reported to be weighing increasing output, and factions in Libya reached a deal that opens the way to the return of some crude production. Brent dropped toward $73 a barrel and is down almost 4% since the close on Tuesday, while West Texas Intermendiate was near $69. Saudi Arabia is ready to abandon its unofficial oil price target of $100 a barrel in a bid to regain market share, the Financial Times reported, citing people familiar with the deliberations. Representatives from Libya’s rival eastern and western administrations “initialed an agreement” on steps for the leadership for the OPEC member’s central bank, the United Nations said. The potential revival in Saudi and Libyan production comes as crude is heading for its worst quarter this year, hurt by the prospect of additional supply from OPEC+ and China’s dour economic outlook. While oil traders had largely shrugged off China’s earlier monetary stimulus measures, President Xi Jinping on Thursday called for the government to provide more fiscal spending, underscoring the growing anxiety in Beijing over the nation’s slowing growth. US commercial oil inventories shrank by 4.5 million barrels last week, taking levels to the lowest since April 2022, data released on Wednesday showed. Stockpiles of gasoline and distillates, which includes diesel, also fell. A stronger dollar has also weighed on commodities such as oil priced in the currency — with a Bloomberg gauge of the greenback rising by the most in three months on Wednesday as risk appetite abated in wider markets. Meanwhile, the US, European Union, and major powers in the Middle East including Saudi Arabia and Qatar have proposed a three-week cease-fire between Israel and Hezbollah in Lebanon, part of a bid to clear the way for negotiations and avert an all-out war in the region.