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Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Significant Rise in Global Oil Prices Amid OPEC+ Production Cuts


Fri 01 Sep 2023 | 09:50 AM
Oil rig, snow winter, oil pump
Oil rig, snow winter, oil pump
By Ahmad El-Assasy

West Texas Intermediate (WTI) crude futures for October delivery jumped by $2, or 2.45%, to settle at $83.63 per barrel. Likewise, Brent crude for October delivery rose by $1, or 1.16%, to settle at $86.86 per barrel. The most active November contract also climbed by $1.59, or 1.02%, to $86.83.

On a monthly basis, Brent crude saw gains of about 1.5% in August, while WTI recorded gains of 2.2%.

Furthermore, six-month American crude futures were traded at the year's largest discount compared to the closest maturity month. This indicates a shortage of supply and encourages withdrawals from stockpiles. Crude for April delivery was traded at a discount of $3.83 to October delivery, marking the largest discount since November 17.

Weak data in China's manufacturing sector dampened further gains. An official survey revealed the fifth consecutive month of contraction in Chinese manufacturing activities, intensifying concerns about weak growth data in the world's second-largest economy.

The US government also revised its GDP growth downwards to 2.1% for the last quarter from the previously announced 2.4%. Data also showed a noticeable slowdown in private sector job growth in August.

Analysts predict that Saudi Arabia will extend its voluntary oil production cut of one million barrels per day for a third consecutive month in October. This comes in addition to cuts by the OPEC+ alliance, led by OPEC and its allies, including Russia.

The substantial rise in global oil prices is a cause for concern and calls for close monitoring by both governments and stakeholders. Factors such as OPEC+ production cuts and economic indicators will likely continue to influence the oil market for the foreseeable future.