Khalid Al-Falih is viewed as one of the most influential individuals in the global oil market. Investors, traders and other energy experts pay attention when he delivers a message. Yesterday, the Saudi Energy Minister Khalid Al-Falih said that Saudi Arabia will be ready to “meet any demand that materializes to ensure customers are satisfied”. Shortly thereafter crude markets began to slide downward.
Despite the looming Iranian sanctions, crude had a significant sell-off with Brent closing down 4.3 percent, its lowest level in more than two months. With supply concerns taken off the table, the market is shifting its focus towards a weaker economic outlook and signs that demand is softening.
"Rising oil inventories and growing petro-nations' output calm the supply fears related to the Iran oil embargo," said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer.
Some industry experts think prices could rebound in the short-term.
"We still see Brent reaching $85 per barrel by year-end," said U.S. bank Morgan Stanley.
Next year, slower demand and additional U.S. shale oil production should contribute to lower prices, Ruecker of Julius Baer added.
"While in the near term prices are at risk from any further supply disruption, oil should trend lower heading into 2019 as slowing emerging market demand growth and the shale boom restore the oil market's supply cushion," he said.