Crude oil markets experienced a significant downturn on Friday, September 29th, as concerns mounted over Saudi Arabia’s intentions to ramp up its oil production. WTI crude futures dipped by 92 cents, equating to a 1% decrease, closing at $90.79 per barrel. Despite this drop, they managed to close the week with a respectable 0.8% gain. Over the course of September, WTI crude had surged by an impressive 8.6%, marking a substantial 28.5% increase for the third quarter of 2023.
Similarly, BRENT crude witnessed a slight downturn of 7 cents, representing a marginal 0.1% decrease, as it concluded the day at $95.31 per barrel. Nonetheless, it managed to achieve a 2.2% weekly gain, alongside a robust 9.7% surge for the month of September. Impressively, BRENT crude’s performance for the third quarter boasted an impressive 27.3% increase.
The drop in crude oil prices can be attributed to a report from Bloomberg News, which highlighted information provided by the Rapidan Group, an energy consulting company. This report indicated that Saudi Arabia was poised to recommence its efforts to increase oil production, effectively adding downward pressure to oil prices. The trigger for this development was the momentary ascent of Brent crude oil prices beyond the $90 per barrel threshold.
Initially, Saudi Arabia had declared the extension of its voluntary oil production cut, amounting to 1 million barrels per day, until the year’s end. However, it also announced a monthly policy review, suggesting the possibility of production adjustments either upward or downward.
The Rapidan Group’s assessment implies that Saudi Arabia may expedite its production increase in a bid to prevent a situation of overly tight oil supply, which could lead to soaring prices, hamper global economic stability, and affect oil demand adversely.
Investors and industry watchers will be closely monitoring the forthcoming OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting scheduled for October 4th. Despite these developments, it is improbable that OPEC+ will deviate from its existing oil production policy. The current policy, rooted in constrained output and surging demand, has been instrumental in propelling oil prices to their recent heights.
The Spot Market is Closed
Saturday, September 30, 2023