The global oil market experienced a significant surge in prices during the July-to-September period this year, with a quarter-on-quarter increase of nearly 30%. This spike can be attributed to the tight demand resulting from production cuts implemented by OPEC and its allies, led by Russia.
On Friday, Brent crude for November delivery saw a slight drop of 0.1%, reaching $95.31 per barrel. However, it still recorded a weekly gain of 2.2%, a monthly increase of 9.7%, and an impressive 27.3% surge for the quarter. Similarly, November WTI crude fell by one percentage point to settle at $90.79 per barrel, but it achieved a weekly gain of 0.8%, a monthly advance of 8.6%, and a remarkable 28.5% increase for the quarter.
Experts predict that the supply cuts announced by OPEC and its allies, collectively known as OPEC+, will continue to dominate the global oil market for the remainder of the year, ultimately leading to high prices. The Joint Ministerial Monitoring Committee, a panel of the alliance, is scheduled to meet on October 4 to discuss these matters.
In a recent development, Saudi Arabia, a prominent oil producer and de-facto leader of OPEC, extended its voluntary oil production cut of one million barrels per day (bpd) until the end of the year. Additionally, Russia, the world’s second-largest crude producer and OPEC+ ally, pledged to continue its voluntary cut in oil exports by 300,000 bpd until year-end.
To further stabilize the domestic fuel market, the Russian government introduced a temporary ban on foreign sales of diesel and gasoline last week. This move aims to address concerns about tightening supplies at Cushing, Oklahoma, which serves as the delivery hub for Nymex WTI futures. In the fourth week of September, stocks at Cushing fell by 943,000 barrels due to strong refining and export demand.
As the OPEC+ supply cuts persist and concerns about supply levels continue, it is expected that prices will remain high in the global oil market. The ongoing efforts to rebalance supply and demand will be closely monitored by market participants and industry experts alike.
Overall, the third quarter of this year witnessed a significant surge in oil prices, driven by restricted supply resulting from production cuts agreed upon by OPEC and its allies. With the expectation of these supply cuts continuing to influence the market, high oil prices are anticipated for the foreseeable future. The upcoming meeting of the Joint Ministerial Monitoring Committee will provide further insights into the oil market’s trajectory in the coming months.