All eyes are on whether Saudi Arabia will raise crude oil production if Russia’s production drops significantly in the wake of European Union oil sanctions.
Andrei Rudakov | Bloomberg | Getty Images
Oil prices fell after a report was released that Saudi Arabia is ready to increase crude oil production if Russia’s production drops significantly following European Union sanctions.
The Financial Times reported,Sources indicated that Saudi Arabia is aware of the dangers of a lack of supplies, and that “it is not in its interest to lose control of oil prices.”
Oil prices fell in the morning of Asian trading hours. international standard Brent crude futures contracts The last drop was 1.68% at $114.34 a barrel. US crude futures contracts It fell 1.87% to $113.10 a barrel.
European Union leaders agreed on Monday to ban 90 percent of Russian crude by the end of the year as part of the bloc’s sixth package of sanctions against Russia since its invasion of Ukraine. who – which Initially, it led to a rise in oil prices.
Sources told the Financial Times that Saudi Arabia, the de facto leader of OPEC, has not yet seen a real shortage of oil markets. It has so far ignored pressure from Washington to speed up production increases as oil prices have soared this year.
But that situation could change as economies globally reopen amid the pandemic recovery, driving up demand for crude oil.
This will include China, the world’s largest oil importer, where Major cities are starting to loosen restrictions With the number of daily covid cases decreasing.
“While it is not an explicit promise, Saudi Arabia [has] Matt Simpson, market analyst at UK-based trading platform City Index, wrote in a note following the news, seemingly slamming the West.
“Western leaders will take this very well given that inflation – and inflation expectations – remain surprisingly high, and central banks are trying to raise interest rates at the risk of sending their economies into recession,” he added.
The Financial Times report comes ahead of the monthly meeting of the OPEC+ alliance on Thursday, of which Russia is a part. Russia The second largest exporter of crude oil in the world behind Saudi Arabia.
At the same time, some OPEC+ members are also Considering whether to suspend Russia from the oil production dealAnd the The Wall Street Journal reported,Citing unnamed delegates from OPEC.
OPEC delegates are It said Concerned about the growing economic pressure on Russia and its ability to pump more crude oil to calm high prices.
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