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Saudi Arabia: OPEC oil prices remain at very low levels in September as oversupply in global crude markets persists

October 5, 2015

Oil prices remained at very low levels throughout September after plunging to the lowest point since February 2009 on 25 August. The average price of the Organization of Petroleum Exporting Countries (OPEC) oil basket stood at USD 43.5 per barrel on 30 September. The reading marked a 3.8% decline over the same day of the previous month and, on an annual basis, oil prices were down by 53.8%. The average price in the third quarter has been around USD 48.3 per barrel, which is below the USD 57.9 per barrel observed in Q2. While oil-exporting nations benefited from more benign oil prices in Q2, the sharp fall seen in Q3 does not bode well for economic performance among OPEC members.

Oil prices have taken a nose dive in recent months due to the variety of factors that are at play. Global crude markets continued to be oversupplied as many of the world’s largest producers are pumping oil at record levels, while output in the United States remains relatively resilient despite low oil prices. Moreover, the expected re-integration of Iran into the global economy, which has the potential to bolster global oil supply, is exerting downward pressure on prices. On the demand side, uncertainty about the health of the global economy mainly due to turbulences in China’s economy is also contributing to keeping crude prices at low levels.

OPEC pumped 31.54 million barrels per day (mbpd) in August despite the fact that the oil cartel had decided to maintain its oil production quotas at 30 mbpd, according to the latest OPEC Monthly Oil Market Report. The print reflected stronger production in Kuwait, Nigeria and Saudi Arabia, which offset lower output in Angola and Iraq. Saudi Arabia’s oil production reached 10.36 mbpd in August, which was up from the 10.33 mbpd tallied in July.

FocusEconomics Consensus Forecast panelists expect oil production to reach an average of 10.01 million barrels per day this year. In 2016, our panel of analysts sees crude output remaining broadly stable at 10.00 million barrels per day.

Author: Ricard Torné, Lead Economist

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Saudi Arabia Commodities Chart

SaudiArabia Commodity September 2015

Note: Price of the OPEC oil basket in USD per barrel.
Source: Organization of the Petroleum Exporting Countries (OPEC).

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