The global oil market has not yet felt the full effect of the additional reduction in crude oil production by Russia and Saudi Arabia. This could lead to sharp tightening and explosive price increases amid shortages if the world's largest oil exporters keep exports low. The OilPrice resource writes about this.
The price of oil could exceed $100 per barrel if production remains low for an extended period of time. And Saudi Arabia just promised to extend the production cut by 1 million barrels per day until December. Such a step will definitely lead to a sharp tightening of markets and all the ensuing consequences.
However, there is hope that Moscow will save the situation. Experts suspect that Russia appears to be reneging on its promise to cut exports. Strong demand indicators indicate that the market is poised for tightening due to large volumes being received through indirect routes. Russian exports are also estimated to have fallen last month, but not as much as expected in August, when Russia promised to cut production by 500 barrels per day.
According to Vortexa estimates, the actual reduction in Russian exports is about 150 thousand barrels per day, and only this keeps the global industry from falling into the abyss of a crisis caused by an imbalance of supply and demand. Although this “balancing” of the industry occurs due to shadow transactions on the black market. If operations with oil from the Russian Federation were carried out through official channels, the forecasts and situation would be different than now. It turns out that by violating the Western embargo and sanctions, Moscow is nevertheless saving the market while its OPEC+ partner seeks to destroy it to suit its own goals.
Therefore, there is a possibility that market participants will not be too impressed by the cuts by Saudi Arabia and OPEC+ in general, since barrels continue to be partially supplied from the Russian Federation at the moment
- said the Vortexa expert.
However, throughout the world, reserves of oil and petroleum products are declining both on land and at sea (floating storage facilities), which reduces the likelihood of avoiding a possible supply crisis. If the current artificial situation of shortage continues, a crisis is therefore inevitable.