Crude oil price has taken a breather after recording gains for seven consecutive weeks. In early Monday trading, the benchmark for global oil – Brent futures- hit a fresh 2014 high of $93.92. it has since pulled back to the current $92.46. At the same time, WTI futures is at $90.92 as at 09:25 a.m UTC after dropping from the 2014 high of $93.16 on Friday.
Crude oil price has been on an uptrend for over two months now amid the demand/supply imbalance. From the supply side, inventories at key storage facilities have continued to dwindle. For instance, stockpiles at Cushing , Oklahoma have been on a decline for four consecutive weeks. Cushing is the distribution and pricing point for WTI oil. Seeing that the US is a key consumer of oil, declining inventories at its largest storage tank is a sign of tight supplies.
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The tight supplies come at a time when the Organization of Petroleum Exporting Countries (OPEC) continues to struggle to meet the agreed upon amount of 400,000 bpd. Nonetheless, there appears to be a glimmering light in the form of Iranian oil coming back to the market.
On Friday, President Biden’s administration revived sanction waivers in an effort to facilitate the nuclear talks that are on the final stretch. The waivers are a sign that both parties are keen on reaching a deal. If that happens, oil shipments from Iran may help ease the current supply concerns and subsequent rise in crude oil price.
Saudi Aramco’s pricing
At the same time, Saudi Arabia’s state firm – Saudi Aramco has reacted to the surging crude oil price by increasing prices to its consumers in the US, Europe, and Asia in March. For China, its Arab Light oil is now up by 60 cents to $2.80 per barrel. The rest of its Asian grades are up by between 40 and 70 cents while for the US, the price is up by 30 cents.
Saudi Aramco Is the leading exporter of crude oil in the world. Its pricing tends to set the tone for the other producers within the Middle East. Based on the prevalent factors, $100 per barrel appears attainable in the foreseeable future.
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