On Tuesday, oil dropped nearly 2 percent after Saudi Arabia decided to knock back rise in crude oil prices that has threatened the world economy. The Oil Minister of Saudi Arabia provided the most detailed argument to date that the OPEC nation was prepared to meet any supply shortfall.
Ali al-Naimi, Saudi Arabian Oil Minister, said the kingdom was pumping 9.9 million barrels per day for supplying every customer request. Ali also said that Saudi Arabia was willing to turn the taps to the maximum 12.5 million bpd immediately if needed.
"My only mission is to convey to you that there is no supply shortage in the market," Naimi told a media briefing in Doha, Qatar, adding supplies were now outpacing global demand by more than 1 million bpd and that current prices were "unjustifiable".
"We are ready and willing to put more oil on the market, but you need a buyer."
Iranian officials had assured Kuwait that Tehran would not close the strait through which 35 percent of global crude sea-borne shipments passes, according to Sheikh Sabah al-Ahmad al-Sabah, ruler of Kuwait.
Brent crude settled at $124.12 a barrel, down $1.59 on the day and off earlier lows of $123.20. U.S. crude fell $2.48 to settle at $105.61 a barrel.
"Crude prices are down as the Saudis are assuring global markets that they have all the oil available for anybody who wants to buy," said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut. "This follows recent news that Saudi production is stronger and that a large number of VLCCs (very large crude carriers) are headed from the Middle East to the U.S."