The rise of the dollar brings down oil prices

Saudi crude exports rise in July, surpassing a two-year peak

Oil prices fell during trading on Monday, under the weight of expectations of a decline in global demand, along with the rise of the dollar, before a possible major interest rate hike, but concerns regarding supply limited the price decline.

The world’s central banks will almost certainly raise interest rates this week, and the Federal Reserve may raise interest rates by a percentage point.

Brent crude for November delivery fell 0.5 percent, to $90.85 a barrel by 15:03 GMT. The price of US West Texas Intermediate crude for October delivery decreased by 0.6 percent, to $84.57 a barrel.

The British public holiday due to the funeral of Queen Elizabeth limited trading volumes in London yesterday. Oil was also pressured by hopes that the European gas supply crisis would ease. German buyers booked capacity to receive Russian gas supplies through the Nord Stream 1 pipeline, but that was later reversed with no gas flowing.

The dollar settled close to a 20-year high before the decisions expected this week by the Federal Reserve and other central banks. The rise of the dollar increases the cost of priced commodities to holders of other currencies, affecting oil and other risk-sensitive commodities.

Oil also faced pressure due to expectations of lower demand, such as the International Energy Agency’s expectation last week that no demand growth will be recorded in the fourth quarter. However, supply concerns limited the price drop.

Meanwhile, the International Energy Forum said yesterday, citing data from the Joint Organizations Data Initiative (JODI), that Saudi crude oil exports rose for the second month in a row to their highest level in more than two years.

Saudi exports in July increased 2.5 percent to 7.38 million barrels per day, the highest level since April 2020 from 7.20 million barrels per day in June.

The kingdom had increased its crude prices in July for Asian buyers to higher than expected levels amid fears of tight supplies and expectations of strong demand in the summer. It also increased its official selling price to European and Mediterranean buyers, but kept the price differentials for Americans unchanged.

Saudi Arabia was India’s third largest oil supplier in July, and it kept the top spot unchanged for China during the first half of the year.

Saudi Arabia’s production also jumped to its highest level in more than two years to 10.815 million barrels per day from 10.646 million barrels per day in the previous month.

In contrast, crude consumption in Saudi refineries was regarding three percent to 2.763 million barrels in July, while exports of oil products amounted to 1.429 million barrels per day.