Saudi Arabia: Oil prices fall over last month as global economic outlook remains dim
November 29, 2022
The OPEC oil basket traded at USD 90.8 per barrel on average over the last month, down 3.0% from the prior month. Meanwhile, the price was 4.5% higher on a year-to-date basis and was 0.2% higher than on the same day last year.
Crude oil prices fell over the last month largely due to a weaker demand outlook, as the Chinese government ordered fresh lockdowns across swathes of the country and economists warned of an elevated probability of recession in the U.S. next year.
According to official OPEC data, the combined crude oil output among OPEC members fell to 29.5 million barrels per day (mbpd) in October from 29.7 mbpd in September. This mostly reflected lower output in Saudi Arabia.
Looking ahead, OPEC oil output is likely to fall further in November. The cartel’s recent decision to cut quotas is expected to hit production by around 0.8 mbpd. Saudi oil output is likely to be especially hard hit, falling as much as 0.5 mbpd. This will likely dampen GDP growth in the fourth quarter. Meanwhile, Saudi Arabia’s decision to back the cut in quotas has hurt relations with the U.S., a traditional ally and supplier of military equipment. However, the move should help support crude prices and thus Saudi export revenues ahead.