Oil prices slid more than 6 ppercentto below $60 a barrel on Friday to the weakest levels in more than a year, dragging the US stock market back into correction territory, as traders questioned Saudi Arabia’s ability to curtail supply while under pressure from the White House to keep fuel prices low. President Donald Trump has been browbeating his Gulf ally for weeks to prevent a jump in petrol prices. This week he praised Saudi Arabia’s leadership for its role in the 30 ppercentslide in oil prices over the past two months, in which Brent crude dropped from $86 a barrel to a low of $58.41 on Friday. Saudi leaders have been discussing the need to cut output, as a price collapse threatens its budget. But traders said Mr Trump’s support for Crown Prince Mohammed bin Salman in the wake of the killing of journalist Jamal Khashoggi would complicate decision-making in Riyadh.
“President Trump has provided strong political support to Saudi Arabia, but against that he wants lower prices,” said Olivier Jakob, an analyst at Petromatrix in Switzerland. “The president is pushing to keep prices lower for longer and now he has some political leverage.” The deepening oil price fall has weighed heavily on US energy stocks, with the sub-index dropping another 3.3 per cent on Friday to drag the S&P 500 back into correction territory, typically defined as a 10 per cent decline from the recent high.
The main US equity index ended a torrid week with a 0.7 per cent drop — with energy stocks the biggest fallers — to extend its decline since its September 21 peak to 10.4 per cent. That puts it on course for its worst quarterly performance in eight years. BP’s shares closed down 2.4 per cent and Royal Dutch Shell fell 3.4 per cent. ExxonMobil declined 2.7 per cent, while US shale focused Pioneer Natural Resources ended Friday down 4.4 per cent.