Saudi Arabia dropped oil prices for its main Asian and European markets, indicating that demand remained weak as economies and coronavirus cases in China rose. Saudi Arabia, the world's largest oil exporter, may drop prices for its signature Arab Light crude grade to Asia again in February 2023, after they hit a 10-month low this month due to supply worries.
The president of the International Monetary Fund warned that most of the global economy will have a difficult year in 2023 as the world's three engines of growth the United States, Europe, and China all saw declining activity.
Saudi Arabia Aramco, the state-owned oil company, has slashed rates for all types of petroleum that will be supplied to Asia in February. The price of the company's trademark Arab Light grade has been reduced to $1.80 per barrel over the regional benchmark, which is $1.45 less than the price for this month.
In December 2022, the Fed hiked interest rates by 50 basis points 9 (bps), following four consecutive hikes of 75 bps. Brent crude futures have fallen from about $125 per barrel in June to less than $80 this week, with prices falling another 7.5% this week.
The dollar fell after registering significant gains the previous day, offering some support to oil. A lower dollar often reduces demand for oil by making dollar-denominated commodities more affordable to holders of other currencies.