Oil prices rose about 1% during trading today, Monday, June 26 (2023), in an attempt to compensate for the losses incurred during the past week, due to concerns about supply shortages.
This comes after Russia witnessed the Wagner rebellion over the weekend, which raised concerns about political instability in one of the largest oil producers in the world, in addition to news of Saudi Arabia’s intention to extend the voluntary production cut during next August, which may reduce supply.
Oil prices today
By 06:55 am GMT (09:55 am Mecca time), Brent crude futures – for August 2023 delivery – rose by about 1%, to record $ 74.59 a barrel.
West Texas Intermediate crude futures – August 2023 delivery – increased by 0.88% to $69.77 a barrel, according to figures seen by the specialized energy platform.
And oil prices ended their dealings, yesterday, Friday, June 23, in decline, to continue bleeding losses for the second session in a row, amid fears of a global recession that might limit demand.
Over the past week, the price of Brent crude and WTI crude fell by 3.6% and 3.8%, respectively.
Oil price analysis
A clash between Moscow and the Wagner Group was averted on Saturday after the heavily armed mercenaries withdrew from the southern Russian city of Rostov under a deal that halted their rapid advance on the capital.
However, the challenge has raised questions about President Vladimir Putin’s grip on power and concerns about possible disruptions to Russia’s oil supplies.
Consulting firm Rystad Energy said in a note late Sunday that it did not expect to see a significant increase in oil prices due to the “short-term event.”
Rystad added: “We believe that geopolitical risks amid internal instability in Russia have increased,” according to Reuters.
demand for oil
RBC Capital Markets analyst Helma Croft said there are fears Putin could declare martial law, preventing workers from turning up at key loading ports and energy facilities, which could halt millions of barrels of exports.
“It is our understanding that the White House was actively engaged yesterday in engaging with key domestic and foreign producers on contingency planning to keep the market well supplied should the crisis affect Russian production,” she added in a note on Sunday.
Goldman Sachs analysts said markets may identify a somewhat higher probability that domestic volatility in Russia will lead to supply disruptions, adding that the impact may be limited because spot prices remain unchanged.
Both Brent and West Texas Intermediate fell about 3.6% last week amid fears that further interest rate hikes by the US Federal Reserve could dampen oil demand at a time when China’s economic recovery disappointed investors after several months of weaker consumption, production and output. the expected.
“Chinese economic growth has been a nightmare for commodity markets, particularly oil and industrial metals,” CMC Markets analyst Tina Ting said in a note.
Saudi oil
Oil prices fell, supported by the possibility of Saudi Arabia extending the voluntary production cut of one million barrels per day until next August, in light of the challenges facing the global economy.
Sources said, in exclusive statements to the specialized energy platform, that Saudi Arabia may announce a step to extend production cuts during the first week of next July at a maximum, in coordination with OPEC + countries, as part of the Kingdom’s plans to maintain the balance of oil markets.
Saudi Arabia had announced, on June 4, the extension of the voluntary cut that it had approved by 500,000 barrels per day until the end of next year (2024), while reducing production by an additional million barrels per day during the month of next July (2023), subject to extension.
Informed sources confirmed in statements to the energy platform that the current oil price level (ranging between 70-75 dollars) does not satisfy the aspirations of the OPEC + coalition of countries, at a time when Saudi Arabia confirms that its goal is to stabilize the oil markets without specifying a specific level for the price of a barrel of oil.
The following infographic, prepared by the specialized energy platform, monitors the size of the voluntary cut reduction by Saudi Arabia and 8 countries in the OPEC + alliance, which is scheduled to be implemented until the end of 2024:
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