Revenue from the sale of crude and oil products fell in August to one of the lowest levels since the beginning of the crisis in Ukraine, according to Russia, the world’s second-largest producer of petroleum behind the United States in 2024.
Oil Prices Continue Decline
Friday’s drop in oil prices followed steep drops in the previous session as fears about a potential slowdown in U.S. demand and widespread oversupply overshadowed concerns about supply disruptions due to the Middle East conflict and the war in Ukraine.
By 0419 GMT, U.S. West Texas Intermediate oil dropped 51 cents, or 0.82%, to $61.86, while Brent crude futures dropped 49 cents, or 0.74%, to $65.88 a barrel.
Weak Demand Limits Recovery
“The optimism for oil consumption from the greatest economy in the world is tempered by the fact that the (U.S.) inflation struggle does not seem to be won. According to Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova, “even geopolitical turbulence is not boosting oil prices since fundamentals show an excess supply and insufficient demand.”
Expectations are high that the Federal Reserve will lower interest rates next week in an attempt to spur economic growth, which would increase demand for oil. Government reports released Thursday showed that U.S. consumer prices in August rose by the most in seven months and that first-time applications for unemployment assistance surged last week.
OPEC+ Supply Boosts Pressure
Due to the possibility of production or trade flow delays due to war and violence, oil prices rose as much as 2% this week. However, the benchmarks began to decline on Thursday, wiping away the gains from the previous week.
The losses started when the International Energy Agency said in its monthly report that the Organization of the Petroleum Exporting Countries and its allies, including Russia, will boost their scheduled production this year, causing the world’s oil supply to climb faster than anticipated. This grouping is known as OPEC+.
OPEC Maintains Demand Outlook
In its own study, OPEC said that the global economy was continuing on a strong growth trajectory and did not alter its relatively high growth projections for the global oil demand in 2025 and 2026.
According to a daily report from SDIC Futures, the geopolitical concerns are giving oil prices less support as the oil market continues to oscillate between pressures from excess supply and anxieties about temporary interruptions.
With Saudi Arabia, the group’s head, attempting to reclaim market share, OPEC+ resolved on Sunday to increase its oil production quotas starting in October.
Saudi Shipments, Russia Declines
With state-controlled energy company Aramco shipping around 1.65 million barrels per day that way in October—a significant increase from the 1.43 million barrels per day allowed in September—Saudi Arabia’s crude oil shipments to China are expected to soar, several trade sources told Reuters on Thursday.
According to the IEA, earnings from sales of crude and oil products fell in August to one of the lowest levels since the beginning of the crisis in Ukraine, making Russia the world’s second-largest producer of crude after the United States in 2024.
On Wednesday, the Energy Information Administration reported that U.S. oil stockpiles increased by 3.9 million barrels to 424.6 million barrels over the previous week.