A day after OPEC+ rocked the White House with its decision to cut oil production by 2 million barrels per day, the cartel’s main decision-maker, Saudi Arabia, kept oil prices destined for Asian markets on hold and lowered prices destined for Europe. decided to lower the increase.
Saudi Arabia’s state-owned Saudi Aramco left its November price for Arab light crude unchanged, at a premium of $5.85 a barrel above the regional Oman/Dubai benchmark average.
Bloomberg survey of traders and refiners showed that The market expected the price of Arab Light to rise by 40 cents, Reuters poll Expected a gain of 25 cents.
Respondents to a Reuters survey had expected higher prices for Arab Medium and Arab Heavy for Asia, but Aramco raised them by a relatively modest 25 cents.
Aramco lowered all European grades and raised all US grades by 20 cents.
A surprise announcement by Aramco to stabilize prices for a key Arab light grade has prompted a string of Wall Street investment banks to raise oil price forecasts as the Saudi-led OPEC+ alliance cuts production by the biggest in years. It was done the next day.
Analysts at Goldman Sachs have raised their forecast for Brent crude oil for the fourth quarter of 2022 by $10 to $110 a barrel. Morgan Stanley’s oil team has raised its Brent price forecast for the first quarter of 2023 to $100 per barrel from $95. ING analysts have raised their forecast for Brent crude to $97 a barrel from $90 through 2023.
$90 oil for OPEC+ ‘non-negotiable’
Some industry analysts say OPEC+’s move to cut production is an attempt to stem a fall in oil prices that reached about $120 a barrel in the spring.
“$90 oil is non-negotiable for OPEC+ leaders and they will act to protect this price floor,” oil broker PVM’s Steven Brennock told Reuters.
At a press conference after OPEC+’s decision to cut output, Saudi Energy Minister Abdulaziz bin Salman said the move was in response to volatility in the energy market.
“We are here to stay as a coordinating force to bring stability.”
‘The president is disappointed’
Prior to the OPEC+ decision, the White House draft asked the U.S. Treasury Department to: According to CNNdescribed the expected cuts as a “complete disaster” and said it could be considered a “hostile act”.
After OPEC+ announced production cuts, the White House turned sharp criticisms on the alliance.
“The president is disappointed that OPEC+ has taken the short-sighted decision to cut production quotas. [Russian President Vladimir] Putin’s Invasion of Ukraine” National Security Advisor Jake Sullivan and National Economic Council Director Brian Dees said in a statement In response to the announcement of OPEC+.
Sullivan and Diess added that the Biden administration will release an additional 10 million barrels from the Strategic Petroleum Reserve (SPR) “to protect American consumers and promote energy security.”
INGAnalyst said in a note Given that the SPR has been cut aggressively and is now at its lowest level since 1984, there is a limit to how much the Biden administration can free up to keep prices down.
ING analysts said, “Eventually, OPEC+ will be able to cut production for longer than the US can use the SPR.
Reuters contributed to this report.
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Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s ever heard comes from Roy his Peter Clark.