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Oil Prices Hit 10-Month High

Crude oil is trading at levels not seen since last November, with Brent crude prices reaching $93 per barrel on Thursday.

The price increases come as OPEC+ heavyweights Saudi Arabia and Russia extended their voluntary production cuts in an effort to balance the markets—and to make good on Mohammed bin Salman’s threat to punish short sellers and oil speculators who dare to bet against crude oil.

But despite Saudi Arabia’s pledge to stretch out its production cut quotas through the end of 2023, OPEC’s production actually rose in the month of August, according to the group’s Monthly Oil Market Report (MOMR) released on Tuesday. For August, the group’s production rose modestly, by 113,000 bpd, as members not beholden to the cut quotas, such as Iran and Nigeria, lifted production. Meanwhile, Saudi Arabia, Angola, Algeria, and Venezuela were among the countries that saw production declines for August compared to July levels.

OPEC’s outlook for global oil demand for this year was unchanged in its MOMR, at 2.44 million bpd.

Also propping up prices is a storm in Libya that shuttered four oil export terminals over the weekend, further tightening global oil supplies in what some say is an already tight market.

In the United States, the API is set to release crude oil and oil product inventory figures that could further push prices up should there be another inventory fall. Analysts are projecting that crude oil inventories sank by another 2 million barrels last week.

OPEC’s Production Rises in August

OPEC’s crude oil production climbed to 27.45 million barrels per day in August, according to the group’s latest Monthly Oil Market Report (MOMR) published on Tuesday.

A gain of an average of 113,000 bpd was recorded for OPEC’s August output, led primarily by Iran and Nigeria—both exempt from the production quotas. Saudi Arabia’s production declined as expected, by 88,000 bpd to 8.967 million bpd. Production declines were also seen from Algeria, Angola, Congo, and Venezuela.

Venezuela’s production fell by 42,000 bpd, to 730,000 bpd.

Iran’s oil production increase to 3 million bpd comes despite U.S. sanctions, which analysts see as not being strictly enforced as the United States seeks to improve relations between the two countries as U.S. President Joe Biden continues to battle high gasoline prices at the pump. The Administration has denied that it is not enforcing sanctions against Iran.

Iran continues to heavily discount its crude oil to China, analysts have said.

Nigeria’s August production was 98,000 bpd higher than July’s production figure, although July’s production figure was under June’s. Nigeria’s June production was 1.320 million bpd—higher than August’s 1.269 million bpd.

Angola’s production fell by 60,000 bpd to 1.115 million bpd, while Algeria’s fell 26,000 to 933,000 bpd.

By percentages, the largest production decline was seen by Congo at 6%, which saw its production fall from 270,000 bpd to 255,000 bpd. The largest percentage production hike came from Gabon at 11%, going from 204,000 bpd in July to 215,000 bpd in August. Saudi Arabia’s decrease represented a decline of 1%.

OPEC’s share of the total global production increased in August by 0.1%, standing at 27.2%. 

OPEC estimates that total non-OPEC liquids production, including OPEC NGLs, fell by 100,000 bpd in August to 73.3 million bpd—2.3 million bpd higher year over year.

Bitumen Prices Rise in Iran

In the Middle East, Iran had the most increase during the last 10 days. Affected by international and local factors, the price was raised by about 15%. the base price of all petrochemical products increased by around 38% due to a decision by the IME, significantly altering market conditions for the Middle East’s largest producer.

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Oil Prices Hit 10-Month High