Saudi Arabia: Oil prices lose impetus in March
March 30, 2017
Oil prices have started to recede in recent weeks after hitting an over one-and-a-half-year high in early February. The Organization of the Petroleum Exporting Countries’ (OPEC) oil basket traded at USD 50.2 per barrel on 30 March, a decrease of 6.5% from the same day in February. Nevertheless, oil prices have recovered 43.8% of their value from the same day in 2016.
Despite the reduction in crude production by OPEC countries following November’s deal, oil prices declined in March as inventories remain at historically high levels and some non-OPEC countries ramped up supply. Against this backdrop, analysts have started to price in the possibility that OPEC may extend output cuts beyond June. A review conducted by OPEC’s compliance committee and its counterparts from Oman and Russia recommended that the deal be extended until the end of this year. OPEC ministers will convene on 25 May to decide whether to do so.
According to the latest OPEC Monthly Oil Market Report, combined oil output in OPEC countries in February decreased to 31.96 mbpd from 32.10 mbpd in January, mainly reflecting a reduction in production in Iraq, Saudi Arabia and the United Arab Emirates. Of this, Saudi Arabia produced 9.80 mbpd in February, which was below January’s 9.87 mbpd. Conversely, Iran and Nigeria recorded a significant increase in crude production in the same month.