Oil extends sharp decline on prospect of more Saudi and Libyan supply

(Bloomberg) — Oil fell for a second day as Saudi Arabia is reported to be weighing rising output and factions in Libya reached an agreement that paves the way for a return to crude output.

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Brent (BZ=F) fell below $72 a barrel for a loss of nearly 5% since Tuesday’s close, while West Texas Intermediate (CL=F) was near $68. Saudi Arabia is ready to abandon its unofficial oil price target of $100 a barrel in a bid to regain market share, the Financial Times reported, citing people familiar with the deliberations.

Representatives of Libya’s rival administrations in the east and west “initiated an agreement” on steps to lead the OPEC member’s central bank, the United Nations said.

The potential revival in output from Saudi Arabia and Libya comes as crude heads for its worst quarter this year, hurt by the prospect of additional supply from OPEC+ and China’s tough economic outlook. While oil traders have largely rejected China’s previous monetary stimulus measures, President Xi Jinping on Thursday called on the government to provide more fiscal spending, underscoring growing anxiety in Beijing about the nation’s slowing growth.

A stronger dollar also weighed on commodities such as oil for currency prices – with a Bloomberg gauge of the greenback rising to its highest level in three months on Wednesday as risk appetite waned in markets more wide

Meanwhile, the US, the European Union and major Middle Eastern powers, including Saudi Arabia and Qatar, have proposed a three-week ceasefire between Israel and Hezbollah in Lebanon as part of an attempt to pave the way for negotiations and avoid a -no war in the region.

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