The global hydrocarbon market is in turmoil again. According to sources cited by the Financial Times, oil prices continue to slide as Saudi Arabia ramps up its efforts to increase production. The kingdom is determined to reclaim its market share at any cost, sending shockwaves through the oil market. Against this backdrop, crude oil prices have seen their steepest drop in two weeks.

Saudi Arabia appears to be preparing to abandon its unofficial target of $100 per barrel as the government seeks to boost output and regain its position in the global oil market. The move has pushed Brent crude futures below $72 per barrel, while WTI futures have fallen back to the $70 mark. As a result, Brent lost 1.92% and tested two-week lows around $71.50 per barrel.

Earlier, the oil market had rallied on news about major stimulus measures in China. However, developments out of Saudi Arabia rattled traders. A sharp recovery in the US dollar added fuel to the fire, putting further pressure on oil prices. The US dollar index found support around 100.20 before rebounding to 101, driven by renewed demand for safe-haven assets. The dollar gained strong upside momentum following the release of impressive US home sales data.

According to the US Department of Energy, US commercial crude oil inventories fell by 4.5 million barrels in mid-September to their lowest level since April 2022. Stocks of gasoline and distillates, including diesel fuel, also saw a significant drawdown. In this context, the ongoing decline in the oil market paints a grim picture.