Oil Price Steadies as Concerns of OPEC+ Oil Output Cut Wane

Oil Price Steadies as Concerns of OPEC+ Oil Output Cut Wane

/ Oil & Gas / Wednesday, 24 August 2022 09:53

Oil prices fell from a nearly 4% surge the previous day on waning fears of an imminent output cut by OPEC+ on Tuesday.

Brent crude futures fell 21 cents, or 0.2%, to $100.01 a barrel, after rising 3.9%, while WTI futures were down 10 cents, or 0.1%, at $93.64 a barrel after gaining 3.7% earlier.

Crude prices soared on Tuesday morning after OPEC+ de facto leader Saudi Arabia announced that it may decide to cut output once again if and when Iran makes a full comeback to oil markets.

However, nine OPEC sources reportedly told Reuters that the potential OPEC+ production cuts may not be imminent and are likely to coincide with the return of Iran to oil markets if the 2015 nuclear deal between the US and Iran comes through soon. Experts believe that despite the ongoing progress in the deal between the two parties, it will not happen immediately, and hence, the likelihood of OPEC+ trimming the production is minimal.

Energy prices have remained volatile since Russia invaded Ukraine which began in February this year.

US gas prices shot above $10 for the first time in about 14 years due to a surge in prices in Europe after Russia’s Gazprom decided to halt gas supplies from the Nord Stream pipeline.

Meanwhile, as a result of the tight supply, US crude stockpiles fell by about 5.6 million barrels for the week ending August 19, according to market sources citing American Petroleum Institute figures. Gasoline inventories rose by about 268,000 barrels, while distillate stocks increased by about 1.1 million barrels.

During their August 3 meeting, the OPEC+ agreed to increase its targeted production by 100,000 barrels per day (bpd) in September – equivalent to 0.1% of the global demand of around 100 million barrels of oil per day.

The group had agreed to raise output by 648,000 barrels per day in July-August, up from 432,000 bpd in recent months.

The decision came after US President Joe Biden requested the group increase production to tackle the supply disruption caused by Russia’s invasion of Ukraine. Many OPEC+ members, including Russia, have lagged in their production quotas, and only Saudi Arabia and the UAE are deemed to have substantial spare capacity.

Also read:  GCC Likely to Make $1.3 Trillion in Oil Revenue by 2026, Says IMF
Also read: OPEC Lowers 2022 Oil Demand Forecast

Latest Issue

Please publish modules in offcanvas position.