Oil Market Review, August 2022
In August, oil futures ended lower for the third month in a row, marking the longest streak of monthly losses in more than two years.
The reality of slowing global economic growth has been met with;
- Renewed COVID lockdowns in China,
- Continued strength in Russian exports,
- Supply returning from Libya,
- The possibility of Iran bringing more oil to market amid a renewed JCPOA agreement,
- And the strongest US dollar in 20 years.
This is what eventually drove oil prices lower in August, despite a large trading range and ongoing volatility.
Front-month US and worldwide crude price benchmarks fell for the third month in a row, marking the longest such falling streak since the first half of 2020.
Prices rose this week after Saudi Arabian Energy Minister Prince Abdulaziz bin Salman suggested that OPEC+ would reduce its oil supply in comments to Bloomberg News.
Iran and OPEC+
OPEC+, a group of members of the Organization of Petroleum Exporting Countries and its allies led by Russia, will meet for the first time on Monday.
The market is “very unpredictable” to predict what OPEC+ will do. Nonetheless, “keeping the path appears to be the wisest option for now, with clues for future reduction.
Meanwhile, a “Biden-Iran deal” cannot be neglected, according to Alhajji, referring to the possibility of a nuclear agreement between Iran and world powers, which would lead to the West relaxing sanctions on Tehran and enabling more oil to flow into the global market.