West Texas Intermediate (WTI) fell to levels not seen since May 2009 on Sunday after Saudi Arabia cut the price of its oil to customers in the U.S. to compete against the North American boom.
WTI futures were last down 1.3%, trading at less than $78 a barrel for the first time in over five years.
Saudi Arabian Oil Co., known as Saudi Aramco trimmed prices to the U.S. for all grades, the company stated late Monday.
U.S. imports for crude oil from Saudi Arabia declined to the lowest level in four years in October, and Saudi Arabia’s move highly suggest they are willing to fight for market share in the U.S.
WTI prices fell 12% in October, the sharpest drop since May 2012, and have entered what is known as a bear market as they fell more than 20% this year.
U.S. oil imports have been declining on the back of the shale boom that has brought the U.S. near energy independence.
Oil’s collapse is largely attributed to lower global demand, which was accompanied by more production from the Organization of the Petroleum Exporting Countries (OPEC). OPEC members, seeking to defend their market share of a highly oversupplied oil market, have engaged in a ‘price ware.”