Oil prices edged lower, with increased OPEC supply and Saudi price cuts offsetting concerns about the situation in the Middle East

(1) Oil prices fell in early trading on Monday as top exporter Saudi Arabia cut oil prices sharply and OPEC production increased, offsetting concerns about escalating geopolitical tensions in the Middle East. (2) U.S. crude oil is currently down 0.6% to $73.39 per barrel, and Brent crude is currently down 0.57% and trading near $78.31 per barrel. (3) After Yemen’s Houthis attack on Red Sea ships, investors returning from the holiday season began to focus on geopolitical risks in the Middle East, with Brent and U.S. crude both climbing more than 2% in the first week of 2024. (4) U.S. Secretary of State Antony Blinken, who is visiting the Middle East this week, warned that without a coordinated peace effort, the Gaza conflict could spill over to the entire region, despite Israeli Prime Minister Benjamin Netanyahu’s vow to continue the war until Hamas is eliminated. (5) The Organization of the Petroleum Exporting Countries (OPEC) increased production by 70,000 b/d in December to 27.88 million b/d, offsetting upward pressure on oil prices from geopolitical concerns, the survey showed. (6) Increased supply and competition with oil-producing rivals prompted Saudi Arabia on Sunday to lower the selling price of its flagship Arabian Light crude to Asian customers in February to a 27-month low. (7) IG analyst Tony Sycamore said: “If we only focus on the fundamentals, including the increase in inventories, the increase in OPEC/non-OPEC production, and the lower-than-expected Saudi official selling price, then we can’t have any other options than to be bearish on crude oil.” “However, this does not take into account the fact that geopolitical tensions in the Middle East are undeniably heating up again, which would mean limited downside”