Oil prices have fallen after the Organization of the Petroleum Exporting Countries (OPEC), more specifically Saudi Arabia, said it was ready to increase oil production if Russian output falls after EU sanctions. On Monday, 30 May 2022, EU leaders agreed to ban 90% of Russian oil by the end of 2022 as part of a sixth package sanctions package against Russia since the invasion of Ukraine. This initially sent oil prices up, but this Saudi report significantly changed the trade trend of the oil commodity market.
Economic correspondents from the Financial Times, referring to verified sources, stated that Saudi Arabia is aware of the risks of supply shortages and that it must “not lose control of oil prices”. The Financial Times’ sources also said that Saudi Arabia, which is the de facto leader of OPEC, has not yet experienced a real shortage on oil markets but this situation could change as economies reopen globally. This would primarily involve China, as the world’s largest oil importer, where major cities in China are already beginning to ease coronavirus restrictions as daily cases of Covid-19 are declining significantly. “Whilst it’s not an outright promise, Saudi Arabia have seemingly thrown the West a bone,” wrote Matt Simpson, a market analyst at UK trading platform City Index, in a note following the Financial Times’ reports. “This will be well received by Western leaders given inflation – and inflation expectations – remain eye wateringly high, and central banks try to raise rates at the risk of tipping their economies into a recession,” he added.
On 2 June 2022, at 7:15 am CET, the West Texas Intermediate (WTI) light crude oil traded on the New York Mercantile Exchange (NYMEX) commodity market at US$ 113.04 per barrel with the current daily price decline of -1.92%. However, an annual comparison of oil prices, according to data from the technical analysis, showed that WTI oil had risen by 80.09% of its price over the last 52 weeks. Based on these data, since the beginning of this year the price of WTI oil increased its value by +54.9%. At the time mentioned, the European counterpart of the WTI was also in the bear market and traded on the Intercontinental Exchange Europe (ICE) commodity market at US$ 114.04 per barrel, with a daily decline of -1.93%.
According to data from the technical analysis, the current price of North Sea Brent crude oil represents an annual price increase of +74.34% over the last 52 weeks. Also, according to these data, North Sea Brent oil has risen by +51.18% since the beginning of 2022 alone compared to the price reached at the end of 2021. These oil prices were achieved in a situation where according to the US Dollar Currency Index (DXY), we saw the US dollar (USD) at a price level of 102.48 with a daily decrease of -0.02%. At the time mentioned, the global EUR/USD currency pair traded on the international foreign exchange – Forex market at a mutual exchange rate of US$ 1.066 per EUR, with the current daily appreciation of the EUR by +0.14% against the USD. This FT report comes ahead of today’s, 2 June OPEC+ monthly meeting, of which Russia is a part of. Russia is the world’s second-largest oil exporter after Saudi Arabia, and OPEC delegates are currently considering whether it would be useful to suspend Russia’s oil agreement so that the Russian Federation can supply more oil to the market in order to significantly reduce oil prices.