Crude oil futures experienced a significant surge, closing more than 2% higher on Thursday (Aug. 3), driven by tightening oil supply trends in the global market. The increase came as Saudi Arabia extended its oil production cuts, and Russia announced a reduction in oil exports.
WTI crude futures led the charge, rising by $2.06, equivalent to a 2.6% increase, to close at $81.55 per barrel. Similarly, BRENT crude futures climbed by $1.94, representing a 2.3% gain, settling at $85.14 per barrel.
The upward momentum in WTI crude futures was largely influenced by growing expectations of a tight oil supply scenario in the global market. This sentiment arose after Saudi Arabia’s recent announcement to extend the voluntary oil production cut of 1 million barrels per day until the end of September.
According to the decision, Saudi Arabia will continue to limit its oil production to 9 million barrels per day throughout September, marking the third consecutive month of a voluntary 1-million-barrel-per-day reduction in production since July.
Furthermore, various media outlets, citing news sources, reported that Saudi Arabia might consider extending the duration of voluntary oil production cuts or implementing further cuts in the future.
Meanwhile, Russia, a crucial player in the oil market, also contributed to the tightening supply dynamics. Alexander Novak, the Russian Deputy Prime Minister, declared that Russia would reduce oil exports by 300,000 barrels per day in September.
Market participants are closely monitoring the proceedings of the OPEC Plus Joint Ministerial Review Committee (JMMC) meeting, scheduled for today (Aug 4). The outcome of this meeting is expected to provide further insights into the strategies adopted by major oil-producing nations to stabilize and regulate global oil supply.
As the supply constraints tighten, oil prices are likely to remain under the spotlight, with potential implications for energy markets and the broader global economy. Investors and analysts will continue to observe developments in the oil market, keeping a keen eye on any further adjustments to production levels by major oil-producing nations.
The Spot Market is Open
Friday, August 4, 2023