We recently noticed that some third-party companies and individuals impersonated the TOPONE Markets brand and illegally misappropriated our trademarks.

We Hereby Reiterate Our Statement:

  • TOPONE Markets does not provide discretionary account operation trading services, nor does it cooperate with other third-party vendors and/ or agents to provide such services.
  • TOPONE Markets staff will not promise to our customer the definite profit, please do not trust any kind of the profit promise or profit related picture, such as screenshot/ chat history, etc, all investment profit can be only viewed on our official website and application.
  • TOPONE Markets is a professional online trading platform with low spreads and zero handling fees. Be wary of any behavior that asks you for any fees directly and privately. TOPONE Markets does not charge a fee at any stage of its trading process or other fee.

If you have any questions or concerns, please feel free to reach us by clicking the "Online Customer Support" or send an email to our customer care team cs@top1markets.com. We will answer your questions and assist you promptly.

Understood
We use cookies to learn more about how you use our website and what we can improve. Continue to use our website by clicking "Accept". Details
Market News EU sanctions on Russian oil fall, OPEC+ production increase is difficult to curb oil prices

EU sanctions on Russian oil fall, OPEC+ production increase is difficult to curb oil prices

For now, the market's sentiment for tight supply and demand has not been eased by the increase in production by OPEC+ (oil exporters and their oil-producing allies). In the second half of the year, Russia will significantly reduce its crude oil supply due to sanctions, and the amount may reach 2 million to 3 million barrels per day. Analysts generally expect that OPEC+ production increase will not be able to substantially solve the high oil price crisis.

2022-06-07
8740
The oil market has had a bumpy week. Although oil exporting countries finally decided to significantly increase crude oil production, the implementation of the EU's sanctions on Russian crude oil, the recovery of crude oil demand in East Asia, and the decline in US crude oil inventories have all pushed international oil prices to high levels again.

For now, the market's sentiment for tight supply and demand has not been eased by the increase in production by OPEC+ (oil exporters and their oil-producing allies). In the second half of the year, Russia will significantly reduce its crude oil supply due to sanctions, and the amount may reach 2 million to 3 million barrels per day. Analysts generally expect that OPEC+ production increase will not be able to substantially solve the high oil price crisis.

As Europe and the United States have successively imposed bans on Russian oil, more Russian oil products will flow into Asia, and the global oil market has to find a rebalancing.

International oil prices hit a new high since March

Since mid-May, around geopolitical conflicts, EU energy sanctions on Russia, OPEC+ production increase and other issues, international oil prices have risen in a round of shocks, from around $100/barrel to around $120/barrel today. climbed to a new high since March.

On June 3, the price of WTI crude oil futures for July delivery rose 1.71% to close at $118.87 per barrel; the price of Brent crude oil futures for August delivery rose 1.79% to close at $119.72 per barrel.

Since then, the intraday prices of WTI crude oil and Brent crude oil futures have both exceeded 120 US dollars per barrel, which is also a new high since the international oil price rose above 130 US dollars per barrel in early March. As of the afternoon of June 6, GMT+8, Brent crude oil futures were at $120.13 a barrel, and WTI crude oil futures were at $119.3 a barrel.

From the news point of view, the recovery of oil demand in Asia, the implementation of the EU's sanctions program on Russian crude oil, and the decline in US commercial crude oil inventories have all become the driving force for oil prices to continue to rise.

On June 2, after several rounds of negotiations, the EU officially adopted the sixth round of sanctions against Russia, the most notable of which is the ban on 90% of Russian oil imports before the end of the year.

According to the sanctions plan, the EU will gradually stop member states from purchasing Russian crude oil by sea in the next six months, and stop importing Russian refined oil products by sea in the next eight months; Land countries will be temporarily exempted from importing Russian oil through onshore pipelines.

The EU is expected to reduce oil imports from Russia by more than 90% by the end of 2022. In addition, EU officials said EU companies would stop insuring Russian ships carrying oil from other countries.

Russia has said the sanctions are likely to trigger a new round of price increases, destabilize energy markets and disrupt supply chains.

The Huatai Futures Research Report pointed out that the EU’s ban will lead to a sharp contraction in Russia’s crude oil trade with Europe, and the insurance ban will limit Russia’s ability to export crude oil to Asia. In the future, Russia will further expand its crude oil exports to Asia, but overall exports will still face a halving. European refiners will increase crude oil imports from the Middle East, the United States and other places to fill the Russian supply gap.

Despite the surge in oil prices to recent highs, oil producers remain optimistic about the market's strong demand. On June 5, Saudi Aramco raised the price of Arab light crude oil for Asian customers in July by $2.1/barrel compared with June, and the adjusted price was $6.5/barrel higher than the price in Dubai Oman. In addition, Saudi Aramco also raised the price of crude oil sold to Northwest Europe and the Mediterranean region.

OPEC+ production increase is difficult to make oil prices "fever"

Since the beginning of this year, the increase of international oil prices has exceeded 50%, and there is still no obvious sign of "fever". The United States, which is suffering from high oil prices, continues to put pressure on oil-producing countries, hoping that OPEC+ can increase oil production and cool down the continuously high oil prices.

OPEC+ has previously insisted that the current high oil price crisis is mainly due to political factors brought about by the geopolitical crisis and has nothing to do with the fundamentals of supply and demand in the crude oil market. But as the relationship between the United States and the Saudi government warmed, the Saudi side finally relented and agreed to speed up production increases.

On June 2, OPEC+ decided to increase crude oil production in July and August by 648,000 barrels per day, a 50% increase from the previous plan of 432,000 barrels per day.

Despite the statement made by the Organization of Petroleum Producers, oil prices continued to jump at a high level, and the market did not have very good expectations for the implementation of OPEC+'s production increase and the actual effect it could produce.

By convention, OPEC+’s production quotas will still be allocated proportionally among countries, while Angola, Nigeria and Russia and other countries have failed to meet the production growth targets. After their production quotas are raised accordingly, their actual production will still be lower than the official target. .

The Huatai Futures Research Report pointed out that since the beginning of this year, the actual production increase of OPEC+ is far lower than the production increase plan and market expectations. Although the organization has made production increase adjustments, Saudi Arabia and the United Arab Emirates will still increase production in a reserved way and will not completely consume their own production. The remaining capacity to fill the Russian supply gap. Especially when the Iran nuclear talks are still pending, Saudi Arabia will not play its trump card.

Chen Shuxian, chief analyst of the petrochemical industry of Cinda Futures, analyzed that, combined with the embargo of seaborne crude oil and refined oil, it is expected that Russia's oil exports to the EU will decrease by about 3 million barrels per day in the second half of the year compared with April. At present, Saudi Arabia and the United Arab Emirates are the only two countries in OPEC+ that have the remaining capacity to increase production. After completing the set production increase target, the remaining capacity of the two countries is 480,000 barrels per day and 1.01 million barrels per day, respectively, with a total limit of 1.5 million barrels of production capacity. barrels/day.

Chen Shuxian said that in the second half of the year, the additional production increase by OPEC+ and the increase in India's crude oil imports from Russia cannot make up for the decline in Russia's crude oil exports. Considering the arrival of the travel peak in Europe and the United States in June and the recovery of China's crude oil demand, it is expected that the global crude oil supply and demand pattern may remain tight.

Russian Deputy Prime Minister Novak expressed support for the OPEC+ decision to accelerate production increases, which he believes will be the right decision to balance supply and demand in the market. Novak said the EU embargo on Russian crude oil and petroleum products will take 6-8 months to complete, during which time the market will rebalance and Russian oil and refined oil will flow to new markets.

S&P Global Platts analysis said that the United States has announced that it will ban Russian crude oil imports, and the European Union is also in the process of banning, which will make Asia the only export destination for Russian crude oil, so Asian buyers will have an advantage in pricing. With the gradual increase in India's crude oil imports from Russia, Russia is also showing signs of becoming more and more dependent on the Asian market.

Commonwealth analysts predict that in 2022, Asia will account for about 40% of global crude oil growth, while the United States and Europe will account for 30% and 18%, respectively.

As Europe and the United States have successively imposed bans on Russian oil, more Russian oil products will flow into Asia, and the global oil market has to find a rebalancing.

International oil prices hit a new high since March

Since mid-May, around geopolitical conflicts, EU energy sanctions on Russia, OPEC+ production increase and other issues, international oil prices have risen in a round of shocks, from around $100/barrel to around $120/barrel today. climbed to a new high since March.

On June 3, the price of WTI crude oil futures for July delivery rose 1.71% to close at $118.87 per barrel; the price of Brent crude oil futures for August delivery rose 1.79% to close at $119.72 per barrel.

Since then, the intraday prices of WTI crude oil and Brent crude oil futures have both exceeded 120 US dollars per barrel, which is also a new high since the international oil price rose above 130 US dollars per barrel in early March. As of the afternoon of June 6, GMT+8, Brent crude oil futures were at $120.13 a barrel, and WTI crude oil futures were at $119.3 a barrel.

From the news point of view, the recovery of oil demand in Asia, the implementation of the EU's sanctions program on Russian crude oil, and the decline in US commercial crude oil inventories have all become the driving force for oil prices to continue to rise.

On June 2, after several rounds of negotiations, the EU officially adopted the sixth round of sanctions against Russia, the most notable of which is the ban on 90% of Russian oil imports before the end of the year.

According to the sanctions plan, the EU will gradually stop member states from purchasing Russian crude oil by sea in the next six months, and stop importing Russian refined oil products by sea in the next eight months; Land countries will be temporarily exempted from importing Russian oil through onshore pipelines.

The EU is expected to reduce oil imports from Russia by more than 90% by the end of 2022. In addition, EU officials said EU companies would stop insuring Russian ships carrying oil from other countries.

Russia has said the sanctions are likely to trigger a new round of price increases, destabilize energy markets and disrupt supply chains.

The Huatai Futures Research Report pointed out that the EU’s ban will lead to a sharp contraction in Russia’s crude oil trade with Europe, and the insurance ban will limit Russia’s ability to export crude oil to Asia. In the future, Russia will further expand its crude oil exports to Asia, but overall exports will still face a halving. European refiners will increase crude oil imports from the Middle East, the United States and other places to fill the Russian supply gap.

Despite the surge in oil prices to recent highs, oil producers remain optimistic about the market's strong demand. On June 5, Saudi Aramco raised the price of Arab light crude oil for Asian customers in July by $2.1/barrel compared with June, and the adjusted price was $6.5/barrel higher than the price in Dubai Oman. In addition, Saudi Aramco also raised the price of crude oil sold to Northwest Europe and the Mediterranean region.

OPEC+ production increase is difficult to make oil prices "fever"

Since the beginning of this year, the increase of international oil prices has exceeded 50%, and there is still no obvious sign of "fever". The United States, which is suffering from high oil prices, continues to put pressure on oil-producing countries, hoping that OPEC+ can increase oil production and cool down the continuously high oil prices.

OPEC+ has previously insisted that the current high oil price crisis is mainly due to political factors brought about by the geopolitical crisis and has nothing to do with the fundamentals of supply and demand in the crude oil market. But as the relationship between the United States and the Saudi government warmed, the Saudi side finally relented and agreed to speed up production increases.

On June 2, OPEC+ decided to increase crude oil production in July and August by 648,000 barrels per day, a 50% increase from the previous plan of 432,000 barrels per day.

Despite the statement made by the Organization of Petroleum Producers, oil prices continued to jump at a high level, and the market did not have very good expectations for the implementation of OPEC+'s production increase and the actual effect it could produce.

By convention, OPEC+’s production quotas will still be allocated proportionally among countries, while Angola, Nigeria and Russia and other countries have failed to meet the production growth targets. After their production quotas are raised accordingly, their actual production will still be lower than the official target. .

The Huatai Futures Research Report pointed out that since the beginning of this year, the actual production increase of OPEC+ is far lower than the production increase plan and market expectations. Although the organization has made production increase adjustments, Saudi Arabia and the United Arab Emirates will still increase production in a reserved way and will not completely consume their own production. The remaining capacity to fill the Russian supply gap. Especially when the Iran nuclear talks are still pending, Saudi Arabia will not play its trump card.

Chen Shuxian, chief analyst of the petrochemical industry of Cinda Futures, analyzed that, combined with the embargo of seaborne crude oil and refined oil, it is expected that Russia's oil exports to the EU will decrease by about 3 million barrels per day in the second half of the year compared with April. At present, Saudi Arabia and the United Arab Emirates are the only two countries in OPEC+ that have the remaining capacity to increase production. After completing the set production increase target, the remaining capacity of the two countries is 480,000 barrels per day and 1.01 million barrels per day, respectively, with a total limit of 1.5 million barrels of production capacity. barrels/day.

Chen Shuxian said that in the second half of the year, the additional production increase by OPEC+ and the increase in India's crude oil imports from Russia cannot make up for the decline in Russia's crude oil exports. Considering the arrival of the travel peak in Europe and the United States in June and the recovery of China's crude oil demand, it is expected that the global crude oil supply and demand pattern may remain tight.

Russian Deputy Prime Minister Novak expressed support for the OPEC+ decision to accelerate production increases, which he believes will be the right decision to balance supply and demand in the market. Novak said the EU embargo on Russian crude oil and petroleum products will take 6-8 months to complete, during which time the market will rebalance and Russian oil and refined oil will flow to new markets.

S&P Global Platts analysis said that the United States has announced that it will ban Russian crude oil imports, and the European Union is also in the process of banning, which will make Asia the only export destination for Russian crude oil, so Asian buyers will have an advantage in pricing. With the gradual increase in India's crude oil imports from Russia, Russia is also showing signs of becoming more and more dependent on the Asian market.

Commonwealth analysts predict that in 2022, Asia will account for about 40% of global crude oil growth, while the United States and Europe will account for 30% and 18%, respectively.

Article source: 21st Century Business Herald
Previous
Next

Bonus rebate to help investors grow in the trading world!

Need Assistance?

7×24 H

Download the APP for Free