Palm trees and buildings in Saudi Arabia

Saudi Arabia Commodities March 2023

Saudi Arabia: Oil prices jump to an eight-month high in November

Oil prices were up notably month-on-month, driven by positive developments on the Covid-19 vaccine front. On 27 November, the OPEC oil basket traded at USD 46.7 per barrel—the highest level since 6 March—marking a 18.0% surge from one month ago. That said, the price was 27.5% lower than on the same day in 2019 and down 30.5% from the start of the year.

The rise in oil prices over the past month was primarily driven by rising market sentiment due to positive news on the development of a Covid-19 vaccine. Despite lingering distribution challenges and fears of a second strain of the virus, most analysts anticipate the vaccine to be widely available by mid-2021 boding well for economic activity next year. This likely drove fuel demand prospects higher for H2 2021, and consequently benefitted crude prices. Moreover, an unexpected fall in U.S. crude inventories in late November should have also exerted some upward price pressure.

That being said, OPEC oil output rose in October over the previous month, while lowering its global oil demand outlook in early November for the remainder of 2020 and next year, which should have capped the overall rise in prices. OPEC cut its 2020 global demand outlook by 0.3 million barrels per day (mbpd) to 90.0 mbpd marking a 9.8% fall year-on-year. The downward revision was due to weaker-than-expected demand in 3Q20 and the recent tightening of containment measures in Europe. Global oil demand prospects for 2021 were also reduced by 0.3 mbpd—compared to October’s assessment—to 96.2 mbpd.

The recent downward revision in global oil demand raised the prospects of OPEC+ delaying the previously agreed easing of output curtailment for January.

In terms of OPEC production, combined crude oil output among members increased from 24.1 million barrels per day (mbpd) in September to 24.4 mbpd in October, mostly reflecting stronger output from Libya and Iraq. Saudi output was stable at September’s 9.0 mbpd in October.

FocusEconomics Consensus Forecast panelists estimate oil production in Saudi Arabia to average 10.05 mbpd in 2020. In 2021, our panel sees crude oil output increasing to 10.40 mbpd.

FocusEconomics Consensus Forecast panelists estimate oil production in Saudi Arabia to average 10.05 mbpd in 2020. In 2021, our panel sees crude oil output increasing to 10.40 mbpd.

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