Brent values gain as Saudi oil minister dispels rumours of OPEC+ production increases

Front-month ICE Brent has gained $1.26/bbl on the day, to $88.15/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

OPEC producers Saudi Arabia, UAE and Kuwait have dismissed reports that OPEC+ is considering a production boost ahead of the EU sanctions against Russia. A Wall Street Journal report yesterday quoted sources saying that OPEC and its allies are discussing a 500,000 b/d increase in production at the 4 December OPEC+ meeting, one day before the EU embargo comes into effect.

In a statement released by Saudi Arabia's state news agency SPA, Prince Abdulaziz bin Salman denied the reports saying, “it is well known, and no secret, that OPEC+ does not discuss any decisions ahead of its meetings. The current cut of 2 million b/d by OPEC+ continues until the end of 2023 and if there is a need to take further measures by reducing production to balance supply and demand, we always remain ready to intervene.”

ING’s head of commodity strategy Warren Patterson says “It would be an odd move from OPEC+ to increase supply when there is still so much demand uncertainty, and while there is still so little clarity on what the full impact of the EU ban on Russian oil will be.” He believes that the market will change only after “more clarity” on Russian supply.

Downward pressure:

Beijing has re-enforced a lockdown in certain districts, and "...is facing its most severe Covid test yet after it saw the country's first coronavirus deaths in six months and cases continue to soar," BBC reports.

Bloomberg has tweeted that “China's crude buyers pause purchases of some Russian oil as they wait for details of a US-led cap to see if it presents a better price.” Last week, Reuters reported that Chinese refiners had reduced their purchases of Russian crude oil. They also asked Saudi Aramco to cut crude oil deliveries by half in December, citing lower demand.

A report released by China's National Bureau of Statistics shows that crude oil production increased in October. The world's second-biggest oil consuming country produced 17.22 million mt of crude oil in October, an increase of 2.5% on the year and a rise of 1.1% from September.

By Konica Bhatt

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