By Rhod Mackenzie
The price of oil has reached $83 per barrel. Which according to analysts, is a reaction to the market beginning to evaluate the imminent reduction in supplies from Russia and Saudi Arabia. Their domestic companies may lose out in export volumes, but will gain from the increase in the oil price.
On July 25, quotations of the benchmark grade Brent rose to $ 82.8 per barrel. Deliveries next month are estimated at around the same price. From the end of June, oil began to rise in price and over the month the price rose by 14%. Brent last traded on the exchanges at almost $83 in mid-April.
The rise in price has coincided with the statements of Russia and Saudi Arabia about the reduction of exports and oil production. Moscow promised to reduce foreign sales by 500,000 bpd in August. And Riyadh announced the extension of the July production cut of 1 million barrels per day for August.
“The oil market is slowly beginning to assess the looming supply crunch as it enters its fourth week of consistent price increases,”Price Futures Group analyst Phil Flynn told Reuters the day before . He believes that the decline in global supplies could accelerate in the coming weeks.
Jay Hatfield, chief executive of Infrastructure Capital Management , noted that limited OPEC+ supplies and good demand in the US are supporting the price, but China's economic recovery continues to lag behind forecasts.
“We estimate the balance of supply and demand for oil in the range of $75-$95 for 2024,” the analyst said.
The latest decisions by the Russian government will reduce exports, but higher prices should offset the effect of cuts. Traditionally, the price of Russian oil is tied to the price of Brent, and, as the Russian Ministry of Finance reported, however since June, the difference between Urals and Brent quotes has fallen well below $20 per barrel to around $5.