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- October 17, 202613°
- BIST10011,722-2.89%
- USD49.45+0.05%
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- INTEREST37.00%-1.00
- BITCOIN81,118-0.47%
- October 17, 202613°
OPEC+ meets Sunday; August oil output rise expected
The OPEC+ alliance is expected to approve a daily production increase of 188,000 barrels starting in August at its Sunday meeting. Oil prices fell as shipping in the Strait of Hormuz normalized and supply increased.
The eyes of the global oil markets are on the OPEC+ alliance meeting on Sunday. According to three sources speaking to Reuters, the alliance's seven largest producers are preparing to increase daily production targets by about 188,000 barrels in August.
This increase is at the same level as the amounts approved in June and July. If confirmed, the total production increase since April will reach 1 million barrels per day. The move is part of the plan to gradually roll back the 1.65 million barrels per day voluntary cuts initiated in 2023.
Prices return to pre-war levels
Oil prices have fallen sharply in recent weeks as geopolitical risks eased. Brent crude slipped below $72 a barrel, while West Texas Intermediate (WTI) traded at $68.30. Thus, both benchmarks have given back almost all the premiums gained during the war.
The main reasons for the pressure on prices include the normalization of transits through the Strait of Hormuz, the US military presence making navigation safe, and the activation of alternative export routes. A US official speaking to Bloomberg said the amount of oil transported through the strait in recent weeks exceeded 10 million barrels per day. The official stated that about 5 million barrels per day were also shipped via alternative routes, and that the total flow approached the pre-war level of 20 million barrels per day.
Spot moves from Saudi Arabia and the UAE
Saudi Arabia began increasing its actual exports to the Asian market. According to Bloomberg, state company Aramco sold at least 6 million barrels of crude oil on the spot market to customers in China, Japan, and South Korea. This move by the company, which normally operates through long-term contracts, attracted attention. Aramco also resumed loading operations from Ras Tanura, the largest oil terminal in the Persian Gulf.
The United Arab Emirates' national oil company ADNOC also accelerated its spot sales in recent weeks. The company also floated plans to link its official selling prices to the Dubai benchmark index.
Iraq's quota reaction: 'All options on the table'
Ahead of the OPEC+ meeting, Iraq's discomfort with the quota system surfaced. Reuters reported last week that the Baghdad administration was weighing all options, including withdrawal from OPEC, if a significant increase in its production quota was not achieved. Although Iraq later affirmed its commitment to membership, it reiterated its demand for a new baseline production level reflecting current capacity. The alliance is currently conducting a comprehensive production capacity review to set new baseline levels effective from 2027.
US strategic reserve at lowest since 1983
According to the US Energy Information Administration (EIA), the strategic petroleum reserve fell to 340.3 million barrels, the lowest level seen since 1983. This decline is a result of planned sales during which Washington released 172 million barrels and, in coordination with the International Energy Agency, released a total of about 400 million barrels onto the market. Although the reserve is still above the minimum level set by Congress, it reveals the extent to which stocks have been tapped for market stability in recent months.
Venezuela exports and Russia-India flow
Venezuela's oil exports fell to 1.2 million barrels per day in June as earthquakes disrupted loading terminals. However, shipments to the US increased to about 630,000 bpd. Chevron's crude output from Venezuela also reached 293,000 bpd.
On the Russian front, Ukrainian attacks on refineries led to fuel shortages. Moscow began importing gasoline by sea from India for the first time, while planning monthly supplies of about 400,000 tonnes from various countries including Belarus. Meanwhile, India's demand for Russian oil hit a record: imports peaked at 2.7 million bpd in June, accounting for more than half of the country's total crude oil imports.
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