Following a brief videoconference on Wednesday, OPEC and its partners agreed to continue to their existing strategy for moderate monthly oil output increases.
After less than an hour of talks, officials confirmed the 400,000-barrel-a-day supply increase anticipated for October, one of the shortest sessions in recent memory and a stark contrast to the drawn-out deliberations observed in July. OPEC has once again demonstrated its ability to convene and carry out its tasks efficiently.”Harmony will likely use” to respond flexibly to any more market upheavals in the coming year, he said.
While conditions appear to be beneficial for the cartel, there are some concerns on the horizon. Even when demand recovers, the introduction of coronavirus strains has thrown a wrench in the works. The market is also concerned about whether Iran and the United States would agree to relieve sanctions on the Islamic Republic’s oil exports, which is currently looking less likely. West Texas Intermediate recovered early losses, trading 0.4 percent down in New York at $68.54 per barrel.
Fuel use proved resilient
The Organization of Petroleum Exporting Countries and its partners, notably Russia, are in the process of reversing the massive output limits adopted last year during the depths of the covid-19 crisis. The firm announced in July a plan to progressively restore the remainder through September 2022.
Crude prices have mostly recovered from their mid-August lows, and supply for the remainder of the year appears to be rather tight. Despite a White House request to restart output sooner, the 23-nation coalition saw little reason to deviate from the established schedule of gradual monthly supply increases.
When oil markets wobbled throughout the summer as the resurgent virus threatened demand, there were some misgivings about the plan. However, fuel consumption remained resilient, with total oil products supplied in the United States reaching a record high in late August.
For the time being, Iraq is utilizing the OSPs base to measure interest and pricing for its crude, according to Shatari.
For the time being, Shatari added, we are maintaining this tool not only for selling at a lesser price but also as a sensor for OSPs. With market volatility and fast fluctuations, we need a sensor to notify us of our OSPs’ performance.
According to sources, SOMO crude grades have recently traded at significant discounts to their respective OSPs in the spot market, particularly Basrah Heavy. Dealers say that a September-loading Basrah Heavy cargo sold at a discount of roughly $2.3/b-$2.5/b to its official selling price in August.
According to sources, prompt loading dates and a more extended loading program reduced demand from Asian customers for the Medium and Heavy sour grades. According to reports, SOMO conducted a tender in July for 2 million barrels of August loading Basrah Medium oil, which drew little interest from Asian refiners.
During the Platts Market on Close evaluation procedure, SOMO offered Basrah Medium cargoes and got bids in discounts, with the highest bid at a deal of 15 cents/b to the grade’s OSP. SOMO made the decision not to grant the tender.
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