The movement of ICDX crude oil contract prices throughout the third week of August was observed to move up by 1.46 percent, with a price range in the range of USD 87-90 per barrel. At the beginning of the week, prices were under pressure, weighed by the escalating tension between China and the US, which was triggered by the visit of US House of Representatives Speaker Nancy Pelosi to Taiwan (14/8), and led to fears of a resumption of the tariff war between the two world economic giants.
Support for oil prices came from the US Department of Energy report for the week ended August 19, showing oil supplies in the US Strategic Reserve had slumped to 453 million barrels, the lowest level in more than 35 years. The report sparked concerns that supply in the market would be tighter, especially since the United States is one of the main allies that the European Union relies on to secure its energy supply after the embargo on Russia's energy products.
Also supporting oil prices, OPEC Secretary General Haitham Al-Ghais (17/9) warned of the risk of supply shortages in the market due to reduced oil reserves on the producer side. OPEC and its allies have an idle capacity of about 2 million to 3 million bpd, or about 3% of world production. However, Al-Ghais affirmed that OPEC+ should ration its "very limited" production reserves "very carefully." OPEC and its allies are scheduled to meet again on September 5.
CPC Supply Slumps Again, Europe's Energy Crisis Worsens
The Caspian Pipeline Consortium (CPC) - the operator of the pipeline Kazakhstan uses to export most of its oil to Europe via Russia - announced a temporary suspension of oil distribution for two of the three pipelines at the Yuzhnaya Ozereyevka Black Sea terminal from August 17 for repairs. However, the CPC has not detailed the estimated time required for the repair process, and besides that, one pipeline that is still active can only supply less than 70% of its normal capacity. This situation adds to concerns that Europe's already tight energy supply will get worse.
Nuclear Talks Continue; a Deal is Almost Reached
Iranian Foreign Minister Hossein Amirabdollahian (15/8) said that if the US showed a realistic approach and flexibility, nuclear negotiations could reach a point of agreement in the next few days. Iran is reportedly ready to withdraw demands to remove the Iranian Revolutionary Guard Corps from the US List of Terrorist Organizations, one of the key points holding back negotiations. The removal of US sanctions would allow Iran to resume supplying around 1.3 million bpd to 1.4 million bpd of oil to global markets within six to nine months, especially with the current tight energy supply triggered by the embargo on Russia.
USA - API Crude Oil Stocks Change
USA - API Gasoline Stocks Change
USA - EIA Crude Oil Stocks Change
USA - EIA Gasoline Stocks Change
USA - Baker Hughes Oil Rig Count
Source: ICDX Research