Oil trimmed its losses at the end of today’s trading, following the Saudi minister’s statements (AFP)
Saudi Energy Minister Prince Abdulaziz bin Salman said that a coalition of “OPEC+“Means of dealing with challenges, such as the possibility of reducing oil productionAccording to an interview with Bloomberg, broadcast by the official Saudi Press Agency on Monday.
The minister added that the futures and spot markets are becoming increasingly separate, and that a new agreement will be reached between the “OPEC +” partners following 2022, and said: “We will soon start working on a new agreement beyond 2022.”
It is believed that only Saudi Arabia and the UAE have some spare capacity and can significantly increase production, but the Saudi Energy Minister indicated that poor liquidity and high volatility take the focus away from the issue of spare capacity.
The Saudi minister said that “without sufficient liquidity, the market cannot meaningfully reflect its true reality. In fact, it can give a false sense of security, at a time when the spare production capacity is very limited, and the risks of severe supply interruptions are very high.”
Brent crude significantly reduced losses on the back of this news, and was trading down 55 cents at $96.17 a barrel by 16.37 GMT, following falling earlier to $92.36.
The “OPEC +” bloc, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, agreed to increase production by 648,000 barrels per day in both July and August, ending production cuts of regarding 10 million barrels per day adopted in May 2020 to face the repercussions of the Corona virus pandemic.
The group agreed this month to raise production targets by another 100,000 barrels in September, under pressure from major consumers, including the United States, which is keen to cool prices.
The decline in US crude stocks
In the context, data from the US Department of Energy showed that crude oil stocks in the United States’ Strategic Petroleum Reserve fell by 8.1 million barrels during the week ending on August 19.
According to the data, crude stocks in emergency reserves fell to 453.1 million barrels, the lowest level since January 1985.
The amount withdrawn from the Strategic Petroleum Reserve, amounting to 8.1 million barrels, is the largest since the end of April.
In March, US President Joe Biden set a plan to release one million barrels per day over six months from the Strategic Petroleum Reserve to overcome high fuel prices that contributed to sharp increases in inflation.
The Ministry of Energy suggested refilling the Strategic Petroleum Reserve by allowing it to enter into contracts to purchase oil over a period of years in the future at fixed, pre-determined prices. The administration said it believed the plan would help boost domestic oil production.
Disruption of oil supplies from Kazakhstan
In the same context, the operator of the Trans-Caspian Oil Pipeline announced, on Monday, that crude oil supplies along the route from Kazakhstan to Russia were disrupted due to technical damage to the pipeline.
The Caspian Sea pipeline is one of the largest oil transportation projects in the world, with a length of more than 1,500 km, through which most of Kazakh oil and part of Russian oil are exported.
The company operating the line said that two of the three remote mooring units at the offshore oil loading station were shut down, noting that this affected the oil supply along the route to international markets.
Following Russia’s incorporation of the pipeline into the current political equation, Kazakhstan sought to provide alternative outlets, and the largest Azerbaijani pipeline was the ideal solution. It is expected to start transferring the flows through it next September, following it has known its destination across the Caspian Sea line for 20 years, and from there to the Russian port of Novorossiysk to set out for global and European markets.
(Archyde.com, Anatolia, The New Arab)
