ERS

April 13, 2023

PZ ERS in the news - The Telegraph: OPEC causes oil scarcity: price hikes at the pump

AMSTERDAM - Oil cartel OPEC is using a production cut to drive up prices later this year. The group of producers sees a shortfall of about two million barrels of oil a day heading into the fourth quarter, the organization reported Thursday.

The Organization of Petroleum Exporting Countries and allies including Russia, also known as OPEC+, announced on April 2 that it would cut its production by 1.66 million barrels per day by May 1.

Last month, OPEC predicted that global oil demand will grow by at most 2.32 million barrels per day this year. At the same time, the bloc of 13 suppliers with Saudi Arabia leading noted another surplus of oil in the market, which would support production cuts. In response to that prod

Oil prices have already climbed to $87 since the beginning of the month. Thursday Brent oil, the basis for European trading, quoted $86.80 per barrel of 159 liters.

OPEC also reported Thursday based on the latest counts that total production in January through March remained constant at around 28.8 million barrels of production per day.

Cramped

"These new data justify the earlier intervention by OPEC and partners," says Hans van Cleef, energy specialist at consultant Publieke Zaken. Some negative outliers in the economy are still to come, he argues. Other analysts see a chance of recession in the U.S., which would mean less demand for oil.

International Energy Agency (IEA) director Fatih Birol warned Wednesday that the entire oil market will tighten in the second half of the year. That will drive up prices at the pump for the time being.

U.S. WTI oil is now trading at its highest level this year. "The market will be even tighter than initially thought," said ING commodities strategist Warren Patterson. ING also says a lot of demand from countries is dropping. That leads, for example, to lower margins Rotterdam refineries can charge for their distillates such as diesel, gasoline, LPG and naphtha.

In China, crude oil imports rose to 12.4 million barrels a day in March from 10.7 million barrels in February. That is the highest traded volume toward the world's second largest economy this year. That demand then puts further pressure on oil prices with less production from OPEC countries.

©Telegraph

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Publieke Zaken

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