Palm trees and buildings in Saudi Arabia

Saudi Arabia Commodities August 2022

Saudi Arabia: Oil prices fall in August on intensifying recession fears; OPEC+ cuts quotas in September

The OPEC oil basket traded at USD 101.9 per barrel on average in August, down 6.1% from the prior month. Meanwhile, the price was 19.5% higher on a year-to-date basis and was 44.9% higher than on the same day last year.

Crude oil prices fell in August on intensifying fears of a global recession amid rising inflation and interest rates. PMIs for the Euro area, Japan and the United States were all in contractionary territory in August, and activity in China was likely muted as well due to a surge in Covid-19 cases and a heatwave.

According to an unofficial estimate by Reuters, combined crude oil output among OPEC members rose to 29.6 million barrels per day (mbpd) in August from 28.9 mbpd in July. This mostly reflected higher output in Libya. Falling output in Angola and Venezuela dragged on the print. Official OPEC data for August will be released on 13 September.

Meanwhile, on 5 September, OPEC+ agreed to cut production quotas by 0.1 mbpd starting from next month. The cut is unlikely to halt the upward ascent of Saudi oil production: Equal to just 86 seconds of global crude demand, the quota cut will simply undo the same-sized quota hike implemented in August. With Saudi output was already 0.15 mbpd below quota in August, the key determinant of Saudi production ahead will be its production capacity, not its production quota. The OPEC+ move was largely to send a signal to the market that it is prepared to intervene should crude prices continue their recent fall.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest