Output cut warning by using Saudi pushes crude oil futures up

Output cut warning by using Saudi pushes crude oil futures up

by admin- Wednesday, August 24th, 2022 07:06:55 AM

Crude oil futures traded better on Tuesday morning following the reported announcement of the Saudi Oil Minister that the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, may want to reduce production output to control the decline in oil costs.

Citing the declaration of the Saudi Energy Minister, Prince Abdulaziz bin Salman, to Bloomberg, the Saudi kingdom information organisation SPA, stated OPEC stands ready to reduce output to correct a current oil charge decline, driven by terrible futures marketplace liquidity and macro-economic fears. The latest developments do no longer reflect the basics that display tightness in the crude oil market. He said OPEC+ has the way and versatility to cope with challenges.

Quoting the Minister, the report stated the oil futures marketplace has fallen into ‘a self-perpetuating vicious circle of very thin liquidity and excessive volatility’, making the value of hedging and managing risks for market members prohibitive.

On Monday, Brent crude futures touched an intra-day low of $ninety two.36 because of fears of a worldwide recession and a potential supply improve from Iran.

Meanwhile, Iran accused the US of procrastinating in efforts to revive the 2015 nuclear deal. However, the US denied this fee. The revival of the deal will help boom crude oil resources to the market, as it will help lift sanctions on Iranian oil.

Amidst those developments, Europe now faces a clean disruption to power supplies, following damage to a pipeline system bringing oil from Kazakhstan through Russia.

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