Global Fuel Supplies Face Tightening as Russia’s Export Ban Adds Pressure to Crude Oil Market
The current status of the global fuel supplies is marked by the consequences of Russia’s embargo on gasoline and diesel exports and the extension of OPEC+ production cuts. (Photo: FXStreet)
Russia’s Export Ban on Fuel Adds to Global Fuel Supplies Woes, Amplifying Pressure on Tight Global Energy Market, and Highlighting Concerns over Crude Prices and Economic Growth
According to the Barchart article, in today’s market update, November WTI crude oil (CLX23) has seen a decline of -1.43%, while Nov RBOB gasoline (RBX23) has risen by +0.59%. This has resulted in mixed prices for Nov WTI crude oil and gasoline. Notably, the recent rally in the dollar index to a 10-month high has exerted bearish pressure on energy prices. On a more positive note, global manufacturing news has provided a boost to energy demand and crude prices. Both the U.S. Sep ISM manufacturing index and China’s Sep manufacturing PMI exceeded expectations, with strong gains indicating an optimistic outlook.
United Arab Emirates Energy Minister Suhail Al Mazrouei’s comments expressing support for maintaining OPEC+ crude production cuts have bolstered crude prices. However, a potential downside risk for crude is the looming threat of higher interest rates, which could potentially hamper economic growth and energy demand. Fed Governor Bowman has highlighted the need for further rate increases to curb inflation, potentially affecting energy prices.
The global fuel supply situation is also a significant factor influencing crude oil markets. Late last month, Russia announced a ban on gasoline and diesel exports in an effort to stabilize domestic fuel prices. This move is expected to reduce global fuel supplies by approximately 3.4% of total global demand, as per Vortexa data, putting additional pressure on an already tight global energy market.
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Global Fuel Supplies Remain Tight as OPEC+ Extends Production Cuts and Crude Storage on Tankers Decreases
According to the NasDaq article, the tightness in the global fuel supplies and oil market is set to persist due to the extension of OPEC+ production cuts. Saudi Arabia has confirmed its commitment to maintaining a unilateral crude production cut of 1.0 million bpd through December, while Russia has also announced its plan to maintain a 300,000 bpd cut in crude production through December. OPEC+ is scheduled to meet soon and is expected to continue its production cuts.
Despite minor changes, OPEC’s September crude production remained steady at 27.97 million bpd. Additionally, the recent decrease in crude stored on tankers that have been stationary for at least a week has had a bullish impact on prices. According to Vortexa data, this storage has dropped by -11% w/w to 82.52 million bbl as of Sep 29. Finally, improved U.S.-Iran relations, demonstrated by a recent prisoner exchange and the unlocking of $6 billion in Iranian funds, could potentially lead to the resumption of nuclear talks.
Any such deal could result in relaxed Iran sanctions and increased Iranian oil exports. According to TankerTrackers.com, Iranian crude exports surged to a 5-year high of 2.2 million bpd in the first 20 days of August, with China being the primary recipient