Saudi Arabia: Oil prices fall in September on slowing global economy and stronger dollar
October 4, 2022
The OPEC oil basket traded at USD 95.3 per barrel on average in September, down 6.5% from the prior month. Meanwhile, the price was 11.8% higher on a year-to-date basis and was 29.0% higher than on the same day last year.
Crude oil prices fell in September as the global economy continued to slow and the dollar continued to strengthen. Elevated inflation and rising interest rates have dented economic activity across the globe. Meanwhile, weaker economic sentiment and an increasingly hawkish U.S. Fed have boosted prospects for the dollar. As crude is priced in dollars, the higher value of the dollar has made crude more expensive for countries that do not use the dollar, depressing demand.
According to an unofficial estimate by Reuters, combined crude oil output among OPEC members rose to 29.8 million barrels per day (mbpd) in September from 29.6 mbpd in August. This mostly reflected higher output in Libya, Nigeria and Saudi Arabia. Official OPEC data for August will be released on 12 October.
Meanwhile, with crude prices falling, market speculation that OPEC+—a wider cartel which includes OPEC and other oil-producing allies—will cut production quotas at its upcoming meeting on 5 October is growing. A quota cut could have a material effect on Saudi crude output, as the country succeeded in reaching its 11.0 mbpd quota in September, according to the Reuters survey. That said, the effect of a quota cut by OPEC+ on the production of most other member states is likely to be more limited as they have persistently undershot their production targets in recent months.