The price of oil has continued its rise due to a prediction by the Energy Information Administration (EIA) that shale production in the United States will continue to decline. This news has raised concerns about a tighter oil market.
In addition to the EIA prediction, several other factors have contributed to the rise in oil prices. Freight rates have fallen to their lowest levels since May 2022 due to low levels of demand stemming from Saudi Arabia’s production cuts, congestion in China and declining demand. Additionally, major oil companies such as BP, Valero Energy and TotalEnergies are making significant investments in low-carbon fuels, renewable energy and clean energy projects.
Despite calls from the International Energy Agency (IEA) that demand for fossil fuels will peak in 2030, the CEOs of Saudi Aramco and ExxonMobil have said the energy transition will take longer. time than assumed. According to them, investment in oil and gas remains essential to prevent prices from skyrocketing.
Geopolitical risks have also contributed to the rise in oil prices. Azerbaijan’s announcement of “counterterrorism” operations in the Nagorno-Karabakh region has raised the risk of renewed conflict with Armenia. Additionally, IAEA inspectors were banned from Iran’s nuclear facilities, leading to condemnation from the UN watchdog.
In Australia, strikes have begun at Chevron’s Gorgon and Wheatstone terminals, raising concerns about global oil supplies. Meanwhile, US shale production is expected to decline for the third consecutive month in October, hitting its lowest level since May.
China’s private sector refiners are urging the Ministry of Commerce to issue a new batch of crude oil import quotas as they have exhausted their allocation for this year. Saudi Aramco has also made a major acquisition in Latin America, acquiring Chile’s main fuel distributor.
In other news, California has sued major oil companies for allegedly covering up the truth about climate change, and Ireland has rejected plans for a new liquefied natural gas terminal.
Overall, the combination of the factors mentioned above has contributed to the continued rise in oil prices, creating bullish sentiment in the market.
Sources:
– OilPrice.com
– Energy Information Administration (EIA)
– International Energy Agency (IEA)
