Oil Tumbles Below $60 As Saudis Cut Prices In A Market Rout

Oil posted a third steep decline — with the US benchmark falling below $60 a barrel — as another plunge across financial markets was compounded by Saudi Arabia making some of the biggest cuts in years to its flagship oil price.

The plunge in just a few days is threatening the coffers of oil-producing nations that need far higher prices to meet their budgets. At the same time, it will take some of the sting out of inflationary pressures from Donald Trump’s tariffs on trade partners. Oil major BP Plc’s shares have declined as much as 20% in three trading sessions while companies across the US shale patch have been battered.

Over the weekend, Saudi Arabia slashed the price of its key Arab Light crude to Asia — the top market — by the most since 2022, adding supply concerns to a deteriorating demand outlook. The kingdom’s price move was bigger than traders expected, and came atop a surprise output hike from Saudi-led OPEC+ last week.

“The overarching theme is the fear of weaker demand and stronger supply,” said Ole Hvalbye, commodities analyst at SEB AB. “The escalating trade war has raised concerns about a potential global recession, leading to weaker demand, compounded by the surprisingly large output hike from OPEC+.”

There was little sign of bullish relief across markets on Monday as a retreat from global equities gathered more momentum with President Trump’s tariff policy sparking worries about growth. The measures could endanger 1.1 million barrels a day of worldwide consumption, consultant Energy Aspects estimated.

A confluence of pessimism has brought crude futures to levels not seen for four years. Benchmark Brent futures are trading below $63 and shed more than 10% last week. They were down another 4.7% at one point on Monday.

Industries from trucking to airlines are likely to feel the benefits of lower fuel costs, while the budgets of OPEC+ nations could be tested. Saudi Arabia needs $90 a barrel to balance its books, according to the International Monetary Fund.

As well as the moves in headline prices, there have been shifts across other parts of the market.

WTI prices for next year are now trading close to $58 a barrel and shale-oil company shares are down more than 15% since Trump announced his tariff policies. A survey by the Dallas Federal Reserve last month said average prices need to be $65 to profitably drill new wells.

There was also record trading of bearish put options on Brent futures on Friday, another sign that traders are bracing for the risk of further declines. Options profiting from price declines are at their biggest premium to those betting on a rally since late 2023.

Banks are turning more gloomy. Goldman Sachs Group Inc. cut its forecasts for the second time in less than a week, while Morgan Stanley Plc reduced its estimates, hot on the heels of other banks last week.

“Such sharp declines are rare,” Morgan Stanley analysts including Martijn Rats and Charlotte Firkins wrote, noting that in percentage terms Brent has only fallen this much over two days 24 times since the 1980s. “Of those, 22 are associated with recession.”

Prices:

• Brent for June settlement fell 3.4 to $63.34 a barrel at 9:30 a.m. in London.

• WTI for May delivery shed 3.7% to $59.71 a barrel.