The price was higher only a few months after the outbreak of the Russian war in Ukraine (July 2022: USD 122.71/barrel). It was not until the beginning of October that crude oil prices eased somewhat. Currently, they are slightly below their highs of several months.
Russia: Production cuts continue
Prices are driven primarily by the tight supply of large producing countries such as Saudi Arabia and Russia. Both countries confirmed that they intend to maintain production cuts until the end of the year.
Russia has already made two voluntary production cuts. In April, it decided to cut its production by half a million barrels per day by the end of the year, and in August it announced it would reduce its exports by 300,000 barrels per day by the end of the year.
By sea, exports from Russia fell by around 30% during September compared to the same period in August. The aim is to stabilize the domestic market, also to lower prices for domestic consumers. In recent months, Russia has already suffered from shortages of petrol and diesel, and wholesale prices for the two fuels have shot up accordingly.
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Although Europe has not been buying Russian oil products since the beginning of February, other countries such as Turkey and North Africa have. If they no longer receive diesel supplies from Russia, they will have to look elsewhere for the missing quantities. For example, in the Middle East or the USA, which puts them in competition with all other buyers.
The situation is aggravated by low stocks, especially in the USA, which has reported maintenance work. Distillate stocks are expected to fall by 11 million barrels in October.
OPEC+: no changes in oil production policy
There is also currently no sign of the OPEC+ cartel moving away from its production policy. As reported on 4 October by an OPEC+ ministerial committee at its online meeting, the group is not making any changes to oil production policy. “The committee will continue to closely monitor market conditions,” an OPEC statement released after the meeting said, according to Reuters. Saudi and Russian production cuts would be recognized and appreciated by the body, it said.
Saudi Energy Minister Prince Abdulaziz bin Salman, who chairs the JMMC, said last month that the OPEC+ cuts were necessary to stabilize the market and that prices would not be targeted.
Saudi Arabia, a key member of the OPEC cartel, will thus continue to voluntarily limit oil production to one million barrels per day until the end of the year. According to the Energy Ministry, production will reach a total of nine million barrels per day in November and December. The move complements a broader agreement by the cartel and its allies, including Russia, to limit supplies to the market, aimed at supporting crude prices.
Russian Deputy Prime Minister Alexander Novak told news channel Rossiya-24 that the joint cuts by Saudi Arabia and Russia had helped balance the global oil market. “We are also fulfilling our obligations in full,” he said.
