**Oil Prices Take a Hit as Saudi Arabia Prepares to Boost Production**
Despite escalating tensions in the Middle East, oil prices plummeted this week, with US crude falling 5% and global benchmark Brent dropping nearly 4%. The decline was largely driven by Saudi Arabia’s commitment to increase oil production later this year, even if it means lower prices for an extended period.
According to Dan Yergin, vice chairman of S&P Global, the market is shrugging off the conflict in the region, including Israel’s airstrike in Beirut, because there has been no disruption to oil supplies. “There’s still over five million barrels a day of shut-in capacity in the Middle East,” Yergin noted.
The oil sell-off erased earlier gains sparked by China’s announcement of new economic stimulus measures. However, soft demand in China has been weighing on the oil market for months, and analysts are skeptical about the effectiveness of the stimulus package.
“The thing that’s dominated the market is the weakness in China,” Yergin said. “Half the growth in world oil demand over a number of years has simply been in China, and it hasn’t been happening.” The big question, he added, is whether the stimulus will lead to a recovery in China, which is what the market is struggling with.
Here are the closing energy prices for Friday:
* US crude: [insert price]
* Global benchmark Brent: [insert price]
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