Crude futures climb as US exports soar to a record
Front-month ICE Brent has gained $2.08/bbl on the day, to $95.70/bbl at 09.00 GMT.
PHOTO: American flag on an oil refinery. Getty Images
Upward Pressure:
Data from the Energy Information Administration (EIA) showing US crude oil exports topped 5 million b/d in the week ending 21 October has added further support to Brent, as the US dollar weakened. Exports were also up from the last four-week average of 4.17 million b/d, according to the EIA.
Low fuel inventories have been a key focus for the Biden administration, which is considering export curbs among other options to boost supplies in the run-up to US mid-term elections. In its report, Wood Mackenzie argues that such an action would challenge already constrained global markets and refinery systems.
Wood Mackenzie analysis has found that possible export curbs could raise diesel costs by $2 billion for European trading partners and wipe out $30 billion for US refineries. “In the long-term, US refineries could see lower future investments, which threatens future US supply,” adds Alan Gelder, vice president at Wood Mackenzie.
The US is not seeking a new round of negotiations or renegotiation discussions on the Iran nuclear deal, according to White House spokesperson John Kirby. Indicating that the US-Iran nuclear deal is all but off the table, Kirby says “Iran continues to make demands that have nothing to do with the nuclear deal that they want to put in there, and we just aren’t there.”
Downward Pressure:
US officials have been forced to rethink a strict price cap on Russian oil prices amid a diesel shortage, Bloomberg reports. US and EU officials are likely to settle for a looser cap at a higher price than once anticipated, according to sources familiar with the matter. This is likely to ease fears that western sanctions on Russia could lead to a shortage of oil.
White House spokesperson John Kirby has stated that US President Biden is committed to keeping oil prices down and balancing supply and demand in a “measured and deliberate way” in response to the Saudi Energy Minister's warning that losing emergency supplies may be painful in the months ahead.
Prices for a combination of energy forms - like oil, gas and coal - are projected by the World Bank to decline by 11% in 2023, after surging by 60% in 2022. Prices have fluctuated a lot since the outbreak of the war in Ukraine, but are now expected to fall, the World Bank says. It predicts Brent to average $92/bbl in 2023, which is still well above the five-year average of $60/bbl.
By Konica Bhatt
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