A glimpse of how China, Russia, Saudi Arabia and Iran are shaping the world of crude oil.
Crude oil showed signs of vulnerability when it consolidated at $82.50, finally breaking support at $80.38, reaching as low as $72.25.
What made #oil prices dip so rapidly?
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China:
- China's role as a major player significantly impacts global oil demand. The decline in oil prices may be attributed to a slowdown in China’s oil demand.
- Also, the lower exports of #petroleum products have further aggravated the situation.
- China's lower exports resulted from refineries depleting government export quotas, and without additional allowances, we may expect a further decline in exports. However, a shift in government policy could regenerate China's demand for oil.
- opec + might implement additional #production cuts to maintain global production below consumption levels.
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Russia, Saudi Arabia, Iran:
- Reports suggest Russia's oil supply remains unchanged, while Saudi Arabia's has really reduced its production.
- As #saudiarabia is a huge supplier of oil globally, ideally the overall supply of oil should get affected, but instead it is being compensated by increased production from #Iran and Russia.
- Iran was not a part of the production cut, and in fact, it has increased its oil production and exports after the #middleeastern conflict. This has impacted the overall supply dynamics.
- With the #usgovernment failing to put sanctions on Iranian oil, these #geopolitics are contributing to market instability.
- As Saudi Arabia’s advice to #Russia on cutting down oil production is falling on deaf ears and with Russia’s continued resistance to production cuts, we are most likely to witness the oil price war similar to the 2020 oil price war.
- The dynamic between Saudi Arabia and Russia remains uncertain, and only time will reveal whether Russia chooses to cooperate or create conflict.
Observing crude oil price movements in the coming days will provide a clearer picture into where the oil market is headed.
