Saudi Arabia’s oil exports soar ahead of OPEC + meeting
After more than a year of volatility due to a pandemic and weak demand for oil, Saudi Arabia is currently experiencing an oil export boom.
Saudi Arabia’s oil exports rose 75 percent year-on-year in March, to a value of nearly $ 14 billion, according to a report by the General Statistics Authority (GASTAT), crude oil accounts for 70 percent of the country’s total exports.
Weak demand, which has driven oil prices down, has been extremely damaging to the world’s largest oil exporter, which has seen its exports drop sharply throughout 2020. However, the country’s oil industry is on the rise. since late last year when oil prices began to stabilize as a pandemic. restrictions have been relaxed.
Non-oil exports also increased by 43% in March, $ 5.96 billion, which is the highest level since July 2018. Exports mainly consist of medical instruments, clocks and watches, plastics and rubber, vehicles, airplanes, ships and transport equipment associate.
OPEC + is scheduled to meet next week, led by Saudi Arabia and Russia, to discuss the increase in oil production, following a strict production quota earlier in the year, as well as the potential impact of an Iranian nuclear deal on production levels.
Michael Lynch, President of Strategic Energy & Economic Research Explain, “The general mood of the market is moderately bullish.” In addition, “people envision a stabilized market in the short term”, with the recovery in demand continuing to take shape, “but with the return of Iranian supply, this is limiting things.”
Following successful vaccination rates in the US and Europe, traders are convinced increased demand for oil throughout the summer months, although Iranian production increases with the relaxation of US sanctions.
On June 1, OPEC + is expected to approve the 840,000 barrels-per-day increase scheduled for July, which will end three rounds of production increases this year, aimed at recovering 2 million barrels by the summer, in line with increasing demand.
The forecast is based on the positive trend in oil demand as well as prices, with Brent on the verge of closing at a two-year high. Brent prices have regularly increased by $ 66.85 Monday at $ 69.69 this Friday, slowly rising to $ 70 a barrel.
Eugen Weinberg, analyst at Commerzbank, declared“On the strength of good economic data and investor risk appetite in the financial markets, Brent is making a new bid for the psychologically important bar of $ 70 a barrel.”
Weinberg also believes that the forecast of declining demand in relation to the Covid-19 pandemic has been overstated, “concerns about demand due to the pandemic giving way to optimism for the rapid return of consumers” .
Oil demand is forecast to rebound to 100 million bpd in the third quarter of 2021, as travel increases and pandemic-related restrictions continue to be relaxed.
Demand for gasoline has already increased this year and is expected to increase further as new vaccines seek to move away from national restrictions and return to the roads to resume normal activities and travel.
President Biden’s American employment plan Also appears to be helping to stabilize demand for oil, in the second largest oil importing country in the world, as unemployment plummeted, providing people with higher disposable income as well as the need to commute, after a year of stagnation.
As Saudi Arabia announces record levels of oil exports, OPEC + is expected to continue easing quotas to resume higher production activity in its member and allied states as a strong recovery in demand is expected for the summer months.
By Felicity Bradstock for Oil Octobers
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