Saudi is anticipated to extend a voluntary crude oil production cut of 1 million barrels per day for a third consecutive month into October. Saudi aims to further reduce global inventories amid market price weakness.
U.S. crude inventories fell by 6.1 million barrels in the week to Aug. 18 to 433.5 million barrels.
OPEC+ had agreed to a broad deal in early June to cut crude supplies until the end of 2024. At the time, Saudi announced the additional voluntary cut bringing its oil production to 9 million bpd.
Earlier in August, Saudi prolonged its voluntary cut into September.
Oil price movement
Brent oil prices in July shot up 14% over June 2023, while in August prices are trending about 3% lower over July as China demand worries kept prices in check.
Oil prices slipped in early Asian trade on Thursday, August 24, 2023, as weak manufacturing data in major economies outweighed optimism around a larger-than-expected drop in U.S. crude stocks, according to Reuters.
Markets are also keeping an eye on interest rate levels despite a dip in inflationary pressures, ahead of a speech by Federal Reserve Chair Jerome Powell in Jackson Hole this Thursday.
Brent crude fell 27 cents, or 0.3%, to $82.94 a barrel, while U.S. West Texas Intermediate crude dropped 31 cents, or 0.4%, to $78.58 a barrel.
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Iran and Iraq production
Iran’s crude oil output will reach 3.4 million barrels per day (bpd) by the end of September, the country’s oil minister was quoted as saying by state media.
Iraq and Turkey held talks this week to resume about 450,000 bpd of exports from northern Iraq.
Iran expects to boost production to 3.4 mn bpd by the end of summer, according to Oil Minister Javad Owji. That would put output near Iran’s capacity limit of 3.8 mn bpd. The country has already boosted production by about 50% over the past two years, according to comments Owji made to Iranian parliament’s energy committee.
The country’s oil sales and production levels, mostly going to China, have hampered OPEC efforts to support oil prices, with Iranian barrels partially countering recent output cuts agreed by Saudi and Russia.
TankerTrackers data indicates that Iran is drawing crude out of land-based storage tanks. The country processes roughly 1.8 mn barrels of crude at domestic refineries each day.
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