Saudi raises oil prices for buyers in Asia and United States

 

The North American crude oil market had experienced mixed prospects in Q3 of 2021. Hurricane Ida which made its landfall near Port Fourchon on the Gulf Coast in the last week of August had taken offline 96% of crude oil and 94% of natural gas production in the U.S. federally administered areas of the Gulf of Mexico (GOM), according to estimates by the U.S. Department of Interior’s Bureau of Safety and Environmental Enforcement. At least nine refineries had either shut down or had reduced production of Crude oil. The gross inputs into Gulf Coast refineries fell by 1.6 million b/d from the week ending August 27 to the week ending September 3. Many refineries had resumed operations by September end.

Saudi Arabia has increased its oil prices on the 6th of December by $1 per barrel for its crude sold to Asia and United States and as indirect US- Iran talks on reviving a nuclear deal appeared to hit an impasse. Brent crude future for February gained $1.61 and by 2.3% to $71.49 while US Texas Intermediate crude for January was at $67.89 a barrel up by $1.63 or 2.5 percent. 

Despite the decision of the Organization of petroleum exporting countries (OPEC+) including Russia to continue increasing the supply of crude oil by 400,000 barrels per day in January, the prices were increased. Prices were also increased by diminishing prospect of rising in Irian oil export after indirect US-Iranian talks on saving the 2015 Iran nuclear deal broke off last week. Russia is facing technical difficulties in raising output in line with the current agreement. In the United States, US energy firms have maintained the number of oil and Natural rags. JBC Energy has lowered its base-case crude demand outlook over December and January by some 300,000 barrels per day.

Crude oil is a raw natural resource that is extracted from the earth and refined into products such as gasoline, jet fuel, and other petroleum products. It is a global commodity that trades in markets around the world, both as spot oil and via derivatives contracts. Many economists view crude oil as the single most important commodity in the world as it is currently the primary source of energy production. Saudi Arabia is the major exporter of Crude Oil with a contribution of 14.7% to the globe. It majorly exports its crude oil to China, Japan, and India.

According to Chemanalyst, the global oil inventories will begin building, driven by rising production from OPEC+ countries and the United States and slowing growth in global oil demand. It is expected that it will put downward pressure on the Brent price, and the prices will decline. The ample supply of crude oil and weak trading atmosphere will alter the prices.