Russian Central Bank Sees Possibility of $25 Crude Oil Prices
September 10th, 2019
S&P Global Platts reported that OPEC’s crude production increased by 50,000 bpd in August to 29.93 million bpd. The group’s compliance with the output cut deal stood at 103%. The August figure is 930,000 bpd lower than OPEC’s 14 members produced in January, and 2.34 million bpd low on the year, not counting Qatar, which left the organization at the end of 2018. The cuts, along with US sanctions imposed on Iran and Venezuela, have contributed to tightening supplies, particularly of heavier and sour crudes.
Russia’s central banks in its risk scenario does not rule out oil prices falling to $25 per barrel in 2020. The risk scenario could be triggered in case of lower global demand for energy products and worsening prospects for global economic growth. In its updated macroeconomic forecast, Russia’s central bank said that in case the risk scenario materializers, inflation is seen increasing to 7-8% in 2020 with GDP falling by 1.5-2%.
The UN’s International Atomic Energy Agency reported that Iran was starting to follow through on its pledge to further breach the 2015 with world powers. It said Iran began installing more advanced centrifuges and is moving towards enriching uranium with them even though that is forbidden under it nuclear deal with major powers.
Saudi Arabia’s new Energy Minister, Price Abdulaziz bin Salman, said the country would continue working with other producers to achieve market balance and added that and OPEC-led supply cut agreement would survive “with the will of everybody.” Price Abdulaziz, who took over as energy minister for Khalid al-Falih, on Sunday said there would be “no radical “change in the oil policy of Saudi Arabia. He told reporters on the sideline of an energy conference in Abu Dhabi that the OPEC and non-OPEC alliance was “staying for the long term” and called on OPEC members to comply with output targets. Separately, he stated that the country is aiming for an initial public offering of Saudi Aramco “as soon as possible.” Saudi Arabia’s new Energy Minster also that that the country wants to have uranium production and enrichment in the future for its planned nuclear power program that will begin with two atomic reactors.
The market was helped to trade higher yesterday by the news that China’s crude imports were up. Today we get the report that China’s producer price index fell 0.8% in August which was the sharpest decline in three years. This is not a good data point but despite this new the energy market continues to push higher trying to establish and uptrend.