Saudi Arabia: Supply shortages and strong fundamentals continue to support oil prices in August
Resilient global growth and concerns about supply shortages are shoring up oil prices. On 28 August, the OPEC oil basket traded at USD 74.8 per barrel, a 1.4% increase from the same day in July. The price was up 15.9% from the start of the year, and 49.9% higher than on the same day in 2017.
Global oil supply is under stress due to declining production in some key producing countries. Security threats are trimming down production in Libya and Nigeria, while U.S. sanctions are crippling Iran’s oil exports. Moreover, oil production in Venezuela remains in free-fall due to years of underinvestment in the oil sector and severe economic mismanagement. Meanwhile, despite escalating trade policy uncertainties and a cooling Chinese economy, global growth remains resilient which is driving demand for the black gold.
Combined oil output among OPEC members edged up from 32.28 million barrels per day (mbpd) in June to 32.32 mbpd in July, according to the cartel’s latest monthly report. The increase was mainly due to higher output in Iraq, Kuwait, Nigeria and the UAE. In contrast, oil crude output in Iran, Libya and Venezuela fell significantly month-on-month. Saudi Arabia pumped 10.39 mbpd in July, down from 10.44 mbpd in June, but comfortably above the 10 mbpd mark.