2023-06-09 20:04:51
Perhaps the Kingdom of Saudi Arabia pumps more oil into electricity generation operations as it is exposed to scorching temperatures during the summer, which boosts demand as expected by the bettors on the rise in prices.
Vikas Dwivedi, global oil and gas analyst at Macquarie Group, said the use of crude oil for electricity generation might increase to 800,000 barrels per day during the summer as a way to absorb excess supply from the market. This measure may give a boost to US oil prices, which recently fell below $70 a barrel.
“There are some indications that they may be using more oil to generate electricity than in previous years as a way to help manage global supplies,” Dwivedi said in an interview. The Saudi move in this context may push Brent crude prices to nearly $80 a barrel during the third quarter of this year.
Power plants in the Kingdom have the potential to generate electricity from a variety of raw materials, including natural gas, fuel oil, and crude oil. During the past year, the volume of demand for crude oil to generate electricity reached 671,000 barrels per day between June and August, an increase of 53% over the previous three months, according to data from the Joint Organizations Data Initiative.
The average temperature during summers in Saudi Arabia can reach 109 degrees Fahrenheit (43 degrees Celsius).
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