Saudi Arabia is in no hurry to raise output
The kingdom has suddenly scaled down the oil production for July, Bloomberg reports, recalling well-informed sources. The largest oil producer among the OPEC Member States – Saudi Arabia – reduced crude oil extraction last month by 200 thousand barrels.
Thus, in July average daily production has fallen up to 10,3 million barrels. Production drops was happened after the Minister of Energy of the kingdom promised to build 1 million barrels for market balancing. And instead of coming to 10,8 million barrels in July, according to the plan, Saudi Arabia has reduced production. This action can indicate that Saudi Arabia can’t find customers to its petroleum. If global demand was not so high as it was predicted by the OPEC, then it would threaten to a new surplus of raw materials, that could affect oil cost.
Saudi Arabia oil production slowdown comes as a surprise. Source: OPEC
However, at the same time the spread between grades of Brent and Urals falls, and it may indicate that consumption remained up to snuff and prices reached the equilibrium at the current levels.
Putin’s oil game
Russia is going to a record on oil production After almost biennial break Russia has aimed to a new record in oil production. According to data of the Ministry of Energy of the Russian Federation, in July Russia has extracted 47,4 million tons of oil. Converting to barrels, it will turn out to 11,14 million barrels a day.
Only in October 2016 the output was higher, 11,15 million barrels. It appears that Russia needs only 15 thousand barrels per day to break the record, basically, it can be a statistical accuracy. Let us remind that only 1,5 months has passed since the OPEС countries have agreed about increase in production.
The level of crude oil production in Russia has grown up already on 237 thousand barrels a day since May. From 11,1 million barrels 4,74 million have been sent for export. Russia planned to increase the production by 200-250 thousand barrels a day and as a result reached it only in 2 months.
A lot of things now depend on OPEC countries. Whether they will be able to stop production growth in time? Bearing in mind the predicted demand for the third quarter 2018, increase in production shouldn’t jeopardize stability in the oil market, it will be counterbalanced.