Saudi Arabia: Oil prices recede in October as market sentiment flips
The oil market mood flipped from fears about supply shortages in the wake of the oil sanctions against Iran to concerns over the state of the global economy and increased supply by key oil producers. On 24 October, the OPEC oil basket traded at USD 75.0 per barrel, a 4.8% decrease from the same day in September. The price, however, was up 16.4% from the start of the year, and 35.0% higher than on the same day in 2017.
In recent weeks, oil prices were affected by news suggesting that the oil market could shift to oversupply. Oil market analysts are increasingly concerned about the health of the global economy, especially following the IMF’s recent downgrade of global growth forecasts for this year and next. Along with weaker growth among developed economies and heightened financial volatility in emerging markets, the IMF warned against rising trade protectionism. All-in-all, a sharp global economic downturn will reduce demand for the black gold, pushing down oil prices. Saudi Energy Minster Khalid al-Falih stated on 22 October that the country is ready to ramp up oil output to 11 million barrels per day (mbpd), while Iraqi authorities also vowed to add a significant volume of oil to the markets. Moreover, Russia just posted a post-Soviet record in its oil production in September, while the United States is regularly reporting new all-time production highs.
Combined oil output among OPEC members edged up from 32.63 mbpd in August to 32.76 mbpd in September, according to the cartel’s latest monthly report. The increase was mainly due to higher output in Angola and Libya. Moreover, Saudi Arabia pumped 10.51 mbpd in September, up from 10.40 mbpd in August. On the flip side, oil output in Iran and Venezuela fell significantly month-on-month.