Saudi king vows to deal with oil fall with "firm will"

Brent crude fell close to $51 a barrel, its lowest since 2009, with cuts to Saudi Arabia’s official selling prices to Europe this week.

By (Reuters)

Published: Thu 8 Jan 2015, 1:19 AM

Last updated: Thu 25 Jun 2015, 7:52 PM

London: Oil prices fell to fresh 5-1/2-year lows on Tuesday, extending a five per cent plunge in the previous session as worries over a global supply glut.

Brent crude fell close to $51 a barrel, its lowest since 2009, with cuts to Saudi Arabia’s official selling prices to Europe this week adding more pressure to the 55 per cent price rout since June.

The Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz of Saudi Arabia, said on Tuesday the world’s top oil exporter would deal “with a firm will” with the challenge posed by lower oil prices in a speech read on his behalf by Saudi Crown Prince, Salman bin Abdulaziz Al Saud and broadcast on state television.

“We would need an indication that Saudi Arabia is considering output cuts,” said Carsten Fritsch, a commodities analyst with Commerzbank.

The Saudi official price cuts on Monday added to bearish data over the weekend showing that Russia’s 2014 oil output hit a post-Soviet-era high and December exports from Iraq, Opec’s second-largest producer, reached their highest since 1980.

Brent crude fell as low as $51.23 a barrel on Tuesday, its lowest level since May 2009. It recovered slightly to $51.96 at 1430GMT, down $1.15 on the day. US crude was at $48.94, down $1.10, after falling to $48.47, its lowest since April 2009.

Fritsch at Commerzbank said other countries including Iraq, Iran and Kuwait are likely to cut their official selling prices in the coming days. The UAE cut its prices on Tuesday.

In the face of official price cuts and a continued supply overhang, markets shrugged off news about rising hostilities and lower oil production in Libya, as well as data showing the number of rigs drilling for oil in the United States fell for a fourth straight week. US commercial crude oil and products stockpiles were forecast to have risen in the week ending January 2, a preliminary Reuters survey showed on Monday.