During Early Asian Trading, Oil Prices Rose

Oil prices rose, and supply concerns ahead of the EU’s embargo on Russian oil in December countered concerns about a worldwide recession dampening fuel demand.

Brent crude futures jumped $1.151, or 1.34%, to $92.51 per barrel, following a 0.5% gain on Friday. WTI crude in the US was trading at $86.16 per barrel, up $1.055, or 1.25%. The first month’s contract will expire on Tuesday.

A weaker dollar, which had fallen from multi-year highs, backed both futures, which fell more than 1% last week on fears of another Fed rate hike. As the US dollar declines in value, dollar-denominated commodities become more affordable for those holding other currencies.

In China, a relaxation of COVID-19 limitations in Chengdu, a city of more than 21M people, alleviated concerns about demand in the world’s second-largest energy consumer. China’s diesel and gasoline exports increased after Beijing announced new quotas, reducing excessive local inventories.

Kuwait Petroleum Corporation’s chief executive said on Sunday that customers continue to demand the same volume despite concerns about the global economy. The Gulf state produces more than 2 million barrels per day according to its OPEC quota.

In other news, oil loading and exporting activities at Iraq’s Basrah oil terminal resumed on Saturday, a day after being interrupted owing to a spillage that has now been contained, according to Basrah Oil Company.

Shell’s 200,000 barrels per day Bonga deep sea storage and offloading vessel in Nigeria will go through maintenance in October.

Saudi Arabia’s July Crude Oil Exports Rise

SA’s crude oil exports increased for the second month in July.

Saudi Arabia’s exports increased by 2.52% in July to 7.38M barrels per day (BPD), the highest level since April 2020, up from 7.21M BPD in June.

The government boosted its July crude prices for Asian consumers to higher-than-expected levels, citing restricted supply and anticipation of rising demand this summer. It also increased its OSP for European and Mediterranean buyers while maintaining US differentials same.

Saudi production also increased to 10.825M BPD in March, up from 10.626M BPD the previous month.

Domestic crude refinery throughput in Saudi Arabia declined approximately 3.54% in July to 2.753M barrels per day, while oil product exports stood at 1.429M barrels per day.

Meanwhile, according to an internal document, the Organization of the Petroleum Exporting Countries and Allies (OPEC+) fell 2.894M BPD shy of its oil production target in July.

Earlier this month, OPEC and its partners, led by Russia, agreed on a slight decrease in oil output to support prices, which had fallen due to concerns about an economic downturn.

Europe Is Racing to Prepare for An Energy Crisis

On Monday, European Nations Revealed Additional Steps to Deal with Anticipated Energy Shortages This Winter and A Race to Enhance Energy Networks to Share Power, with Russian gas shipments still flowing at significantly lower rates due to the Ukraine conflict.

Spain devised plans that might require energy-intensive companies to shut down during peak demand periods. France announced intentions to export gas to Germany beginning in October. Berlin said Europe’s superpower was still negotiating over state rescue for troubled utility Uniper.

For the first time since the Nord Stream 1 pipeline was shut down three weeks ago, German purchasers reserved capacity on Monday to receive Russian gas via the Nord Stream 1 pipeline, which was previously one of Europe’s key gas supply routes. However, they quickly dropped the requests.

It was unclear why customers had submitted requests for capacity since Russia had not indicated that it would restart the connection anytime soon.

Russia, which supplied around 40.5% of the EU’s gas before its February invasion of Ukraine, has stated that Russia cut the pipeline due to Western sanctions. European leaders call this a ruse and accuse Moscow of exploiting energy as a weapon.

Analysts warned on Monday that Europe’s thermal coal imports in 2022 might be the biggest in at least four years. They could grow even further next year, illustrating the severity of the energy crisis following sanctions against key supplier Russia.

European thermal coal imports could hit 100M tonnes this year, the most since 2017. Meanwhile, shipments should reach a four-year high.