Economy

Saudi Arabia will not boost oil export this month, official says

Saudi Arabia will not boost oil export this month, official says

It's no surprise that the U.S.is at the forefront of global production and consistently proving wrong the hordes of critics who until very recently were convinced that outages in Libya and plummeting production in Venezuela would cause a calamitous crude tightening.

In May, U.S. President Donald Trump announced that he would pull America out of a 2015 nuclear agreement with Iran and re-impose the sanctions that the deal had envisaged to be lifted. It rejected as "without basis" any concerns that the kingdom was moving to oversupply world markets.

"Even with USA record production, the combination of record oil demand, along with declining production from Venezuela and sanctions on Iran, we will be in a supply deficit when we see the end of the year demand increases kick in", Phil Flynn of the PRICES Futures Group in Chicago said in a morning market newsletter.

Oil is mostly traded in USA dollars all over the world and a stronger US dollar pressures the oil demand. Some analysis believes that because United States has been benefited from the relatively low petroleum price in the past several years, now, the increasing oil price will give political pressure to Trump.

Saudi Arabia "has to manage the demands for greater oil output and lower oil prices from key consumers while being mindful not to jeopardize the OPEC+ accords agreed at the end of June", said Harry Tchilinguirian, head of commodities strategy for BNP Paribas.

U.S.net imports that measures its imports deducted by its exports is a very important value for the oil price movements.

It was the first such committee meeting since OPEC, Russia and other partners agreed June 23 on a 1 million b/d output increase without specifying how those barrels will be allocated.

Prices also received a boost after OPEC's largest oil producer, Saudi Arabia, said it would temper its exports next month.

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Saudi crude exports fell by about 500,000 barrels a day to 6.7 million in the first half of July compared with the same period in June, tanker tracking by Bloomberg shows.

USA drillers this week cut oil rigs by the most since March, with the rate of growth slowing over the past month with recent declines in crude prices.

Brent and the WTI prices headed different ways on Thursday. The analysts attributed the divergence to the increasing output of Saudi Arabia and Libya. The oil and gas rig count now stands at 1,052-up 100 from this time a year ago.

Tariq Zahir, analyst at Tyche Capital Advisors, added that "You're having supply come back on to the markets, so it's not surprising to see a little bit of weakness", referring to signs of Russian Federation and the Saudis increasing output, despite the latter's temporary abatement in August to ease oversupply concerns.

The price differential between the WTI and Brent contracts of September was less than 3.0 USA dollars.

The higher differentials between the two major benchmarks are, the more arbitrage opportunities for traders to pursue. Brent crude for September settlement rose 49 cents to $73.07 on the London-based ICE Futures Europe exchange.

Lower oil demand in the USA and China, caused by an economic slowdown from their trade dispute, would likely weigh heavily on markets.

Economists point out that tariffs might increase the inflation and disrupt the economic growth of Asian countries which can create a bearish outlook for the oil sector. Russian Federation was also studying all legal implications for a possible deal with Iran under which Moscow would provide goods to Tehran in exchange for oil. An official of the country has stated that the kingdom' s exports will decline next month.