All eyes are on whether Saudi Arabia will increase crude production if Russia’s production declines significantly after the EU oil sanctions.
Andrey Rudakov | Bloomberg | Getty Images
Oil prices fell after a report that Saudi Arabia is ready to increase crude production if Russia’s output falls significantly following EU sanctions.
Financial Times reportedCiting sources, Saudi Arabia is aware of the risks of a supply shortage and it is “not in their best interest to lose control of oil prices.”
Oil prices fell on the morning of trading hours in Asia. international benchmark brent crude futures The previous ones were down 2.12% at $113.82 a barrel. US crude futures fell 2.18% to $112.75 a barrel.
While this is not a clear promise, Saudi Arabia [has] Seems to have thrown a bone at West.
Matt Simpson
Market analyst at UK-based trading platform City Index
EU leaders on Monday agreed to impose sanctions on 90% of Russian crude by the end of the year as part of the bloc’s sixth sanctions package on Russia as it invaded Ukraine. that Initially sent oil prices higher,
Sources told the FT that OPEC’s de facto leader Saudi Arabia has yet to see a real slump in oil markets. It has so far ignored pressure from Washington to ramp up production due to rising oil prices this year.
But that could change as economies globally reopen amid a recovery from the pandemic, fueling demand for crude.
This will include China, the world’s largest oil importer, where Major cities begin easing restrictions As daily covid cases are decreasing.
“While this is not a clear promise, Saudi Arabia [has] Matt Simpson, market analyst at UK-based trading platform City Index, wrote in a note following the news.
“It will be well received by Western leaders given inflation — and inflation expectations — are eye-watering, and central banks try to raise rates at the risk of their economies heading into recession,” he said. are,” he said.
The FT report comes ahead of Thursday’s monthly meeting of the OPEC+ alliance, of which Russia is a part. Russia is world’s second largest crude oil exporter Behind Saudi Arabia.
At the same time, there are some members of OPEC+ Considering suspending Russia from oil production deal, The Wall Street Journal reportedCiting unnamed OPEC representatives.
OPEC’s representatives Allegedly There are concerns about increasing economic pressure on Russia and its ability to pump more crude to cushion rising prices.