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- October 22, 202613°
- BIST10011,577-1.87%
- USD49.58+0.05%
- EUR55.62+0.09%
- GOLD4,148.00-0.05%
- INTEREST37.00%-1.00
- BITCOIN84,356+1.71%
- October 22, 202613°
OPEC+ to meet Sunday; oil output increase expected in August
OPEC+ is expected to approve a daily production increase of 188,000 barrels from August at its Sunday meeting. Oil prices meanwhile fell as navigation through the Strait of Hormuz recovered and supply increased.
Global oil markets are focused on the OPEC+ meeting on Sunday. Three sources told Reuters that the alliance's seven largest producers are preparing to increase daily production targets by about 188,000 barrels in August.
This increase is at the same level as the amounts approved in June and July. If approved, total production increases since April would reach 1 million barrels per day. The move is part of a plan to gradually unwind the 1.65 million bpd voluntary cuts initiated in 2023.
Prices Return to Pre-War Levels
Oil prices have recorded sharp declines in recent weeks as geopolitical risks eased. Brent crude fell below $72 a barrel, while West Texas Intermediate (WTI) traded at $68.30. Thus, both benchmarks have given back almost all the premiums gained during the war.
The main reasons for the pressure on prices include the normalization of transit through the Strait of Hormuz, the U.S. military presence making navigation safe, and the introduction of alternative export routes. A U.S. official told Bloomberg that the amount of oil shipped through the strait has exceeded 10 million barrels per day in recent weeks. The official stated that about 5 million barrels per day are also being shipped via alternative routes, and that total flows are approaching the pre-war level of 20 million barrels per day.
Spot Moves by Saudi Arabia and UAE
Saudi Arabia has started to increase its actual exports to the Asian market. According to Bloomberg, the state company Aramco sold at least 6 million barrels of crude oil on the spot market to customers in China, Japan, and South Korea. The move drew attention as the company normally operates through long-term contracts. Aramco also resumed loading operations from Ras Tanura, the largest oil terminal in the Persian Gulf.
The United Arab Emirates' national oil company ADNOC has also accelerated spot sales in recent weeks. The company also brought up plans to link its official selling prices to the Dubai benchmark index.
Iraq's Quota Reaction: 'All Options on the Table'
Ahead of the OPEC+ meeting, Iraq's unease with the quota system has surfaced. Reuters reported last week that the Baghdad administration is considering all options, including withdrawal from OPEC, if a significant increase in its production quota is not achieved. Although Iraq later stated that it remains committed to membership, it reiterated its demand for a new baseline production level that reflects current capacity. The alliance is currently conducting a comprehensive production capacity review to set new baseline levels effective from 2027.
U.S. Strategic Petroleum Reserve at Lowest Since 1983
According to data from the U.S. Energy Information Administration (EIA), the strategic petroleum reserve fell to 340.3 million barrels, the lowest level seen since 1983. This decline is a result of planned sales during the war, in which Washington released 172 million barrels and, in coordination with the International Energy Agency, put a total of about 400 million barrels on the market. Although the reserve remains above the minimum level set by Congress, it reveals the extent to which stocks were tapped for market stability in recent months.
Venezuela Exports and Russia-India Flows
Venezuela's oil exports fell to 1.2 million barrels per day in June as earthquakes caused disruptions at loading terminals. In contrast, shipments to the U.S. increased to about 630,000 barrels per day. The amount of crude oil that Chevron lifted from Venezuela also reached 293,000 barrels per day.
On the Russian front, Ukraine's attacks on refineries have led to fuel shortages. Moscow has begun importing gasoline from India by sea for the first time, while planning to supply about 400,000 tons per month from various countries, including Belarus. Meanwhile, India's demand for Russian oil hit a record: imports peaked at 2.7 million barrels per day in June, accounting for more than half of the country's total crude oil imports.
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