(MENAFN- The Peninsula) The oil market fell yesterday after major producer Saudi Arabia slashed the price of the crude it sells to Asia and the United States, analysts said.
Brent North Sea crude for delivery in January fell 50 cents to stand at $69.14 per barrel in early afternoon London deals.
US benchmark West Texas Intermediate for December slipped 56 cents to $66.25 compared with Thursday's closing value.
"Saudi Arabia has just cut the price of the oil it sells to Asia and the US and this is going to have a big effect on the market," said Daniel Ang, an investment analyst at broker Phillip Futures.
Saudi Aramco, the kingdom's state-owned oil company, said Thursday it had slashed its official selling price for Arab light grade oil bound for Asia in January by $1.90 a barrel from December's level.
It also reduced the price of Arab light grade oil bound for the United States by 70 cents.
"They're definitely fighting for market share," Ang said.
Saudi Arabia is the biggest and most influential member of the Organization of the Petroleum Exporting Countries (Opec), which last week decided to maintain output levels despite a global oversupply.
Opec's decision at its November 27 meeting in Vienna sent oil prices tumbling to their lowest point in five years. They have declined by about 40 percent since June, faced with cheaper oil being extracted from North American shale rock.
Singapore's United Overseas Bank said Saudi Arabia's move was "reinforcing concerns that the world's leading exporter is now more focused on defending its market share than increasing price".
"Saudi reportedly believes oil prices could stabilise at $60 a barrel and there is also rife speculation that Saudi is also trying to drive high-price producers out of the market," it said in a market commentary.
But French bank Credit Agricole said lower prices should give emerging markets a boost.
"Oil-intensive economies, including the bulk of Asia, would benefit from lower inflation, larger monetary leeway to support the recovery, and lower corporate and household costs," it said.
"Against such a backdrop this could support a scenario of a slight recovery in emerging market GDP growth in 2015."
Separately yesterday, a Norwegian consulting firm predicted that the continued fall of oil prices could lead to postponement of $150bn worth of projects in the sector worldwide.
"Everything will depend on what oil companies decide to do, but if they don't exploit the fields which break even with the barrel above $80, $150bn will go down the drain," chief analyst at Rystad Energy, Per Magnus Nysveen said.
Plunging oil prices, combined with high production costs, force oil companies to postpone or even cancel developments of oil finds in order to maintain their cash flow.
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