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The price of Brent crude oil seems steady at $87, after increasing by more than $10 per barrel last month. The OPEC+ members are fully adhering to their commitments to cut crude oil production. Even though some members are still not fully in line with the current quota reductions, Russia and Iraq remain committed to reducing their production.
From the beginning of this month, Russia has been committed to the OPEC+ agreed production cuts. Even though it is difficult to witness these reductions at a time when the oil prices are at their highest level so far, there have been no complaints. OPEC+ is happy to see the success of its efforts. Currently, all of the positive market factors are driving the oil prices higher.
The 4th of July holiday and the start of the driving season, with over 7.5 million Americans on the road, are increasing gasoline consumption. This surge in demand is pushing U.S. refineries to boost throughput to meet the travel demand by both road and air, creating a strong need for the two most needed products in the US oil markets. Consequently, there has been a reduction of over 12 million barrels of crude oil. Additionally, imports have risen by more than 9% compared to the same period last year. The supply of crude oil has also tightened, as OPEC+ exports have decreased. Gulf states, including Iraq, are burning more crude oil to meet the increased demand caused by a severe heat wave, with temperatures reaching 52 to 53 degrees Celsius. This extreme heat has led to a surge in the use of air conditioning systems, causing hourly power cuts in some Arabian Gulf states. However, OPEC+ will only act after observing the market conditions. Are such market conditions the reason behind the barrel reaching $90 a barrel? Could the steady release of some volumes to the markets be a sign of goodwill? Oil is expected to rise further due to OPEC+’s successful discipline and adherence to its production quotas.
By Kamel Al-Harami
Independent Oil Analyst
Email: naftikuwaiti@yahoo. com
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