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Thursday, June 13, 2024

Petroleum. The Kremlin wants revenge, the Americans have a plan

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Crude oil fell on Tuesday after the US government said it would release more crude from the Strategic Petroleum Reserve (SPR). Earlier, Russia announced that it wanted to reduce production from March.

Oil sales from two SPR storage facilities are expected to amount to 26 million barrels. The sale is in line with a US budget mandate passed in 2015, a Department of Energy (DoE) spokesman said. Reuters reported that such a move would likely mean the reserve was cut to its lowest level since 1983.

In 2022, US administration officials decided to use 180 million barrels of oil from the SPR in order to ease the supply problems after the Russian aggression in Ukrainewhich disrupted global fuel markets and pushed oil prices well above $100 per barrel.

Russia is reducing production

Russia announced on Friday that it plans to cut oil production by 500,000 tons. barrels a day in March. This is about 5 percent of daily production. This is supposed to be a form of revenge by the Kremlin for Western energy sanctions on its oil and fuels.

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“We will not sell oil to those who directly or indirectly comply with the price cap rules,” Russian Deputy Prime Minister Alexander Novak said in a statement quoted by CNN. Therefore, Russia will voluntarily reduce production by 500,000 tons in March. barrels per day. This will contribute to the restoration of (correct) market relations, he added.

According to experts, Moscow has most likely failed to find buyers for more oil in the short term, as the number of recipients of Russian oil is currently limited.

In the opinion of the energy minister of the United Arab Emirates, global oil markets remain balanced for the time being – after the announcement of the Russian plan to cut oil production, and OPEC+ producers do not have to intervene in the markets. “I don’t see a requirement for a meeting on this,” said Suhai Al Mazrouei, the head of the energy ministry UAE.

Now also important for the markets will be Tuesday’s monthly OPEC report, which will give market participants fresh insight into the views of the countries of the cartel on the demand and supply of oil in 2023.

Crude oil – quotations

Crude oil prices are lower on Tuesday morning in response to US plans to sell more crude. A barrel of West Texas Intermediate (WTI) oil for March deliveries after 9 a.m. Polish time cost USD 79.36 at NYMEX in New York, down 0.97 percent. Brent crude on ICE London for April delivery traded at $86.11 a barrel, down 0.58 percent from a year ago.

WTI oil prices on Tuesdaystooq.pl

Brent crude oil on Tuesdaystooq.pl

– Oil prices in the markets are declining after information about the plan to sell raw material from the SPR by United Statesbut this issue tends to remain on the periphery of the markets, said Vandana Hari, co-founder of consultancy Vanda Insights.

– What is important now is cautious optimism about US economies and Europe, a gradual increase in demand in China and the upcoming decline in oil production in Russia by 500,000 barrels a day, he enumerates.

Main photo source: PAP/EPA/MIKHAIL METZEL/KREMLIN/POOL



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