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Saudi Arabia and Russia see $100 as a fair price for oil – report Reuters report, citing sources familiar

Oil has been catching a bit of a bid in the last hour and some of that is due to a report from Reuters highlighting the thinking of Saudia Arabia and Russian leaders.

Saudi Arabia and Russia, the de facto leaders of the OPEC+ oil producer group, see $100 a barrel as a fair price that the global economy can absorb, sources familiar with government thinking in the two countries told Reuters.

OPEC stuck to its forecasts for robust global oil demand growth in 2022 and 2023

Oil demand will increase by 3.1 million barrels per day bpd in 2022 and by 2.7 million bpd in 2023, unchanged from last month, the Organization of the Petroleum Exporting Countries said in a monthly report. The rise in 2023 will push it past 2019 levels for the first time since the pandemic.

The report also showed OPEC output rose by 618k bpd in August to 29.65 mbpd with Libyan outages ending.

Separately, Saudi Arabia said it boosted output by 236k bpd in August to 11.051mbpd.

  • OPEC … forecasts … robust global oil demand growth in 2022 and 2023
  • citing signs that major economies were faring better than expected despite headwinds such as surging inflation
  • Oil demand (forecasts) unchanged from last month
  • “Oil demand in 2023 is expected to be supported by a still-solid economic performance in major consuming countries, as well as potential improvements in COVID-19 restrictions and reduced geopolitical uncertainties”

OPEC are probably right, despite all the ructions seen in markets since the CPI report overall economies are gathering pace. The risk is overzealous central banks plunge everyone into recession, of course.

Blinken calls Iran’s latest response to nuclear deal proposal a ‘step backward’

CNN with the update on comments from US Secretary of State Blinken.

  • “What we’ve seen over the last week or so in Iran’s response to the proposal put forward by the European Union is clearly a step backward and makes prospects for an agreement in the near-term, I would say, unlikely,”
  • Blinken said Monday he could not offer a time frame for when he thinks it will be possible to reenter an Iran nuclear deal, saying Iran is either “unwilling or unable to do what is necessary to reach an agreement.”
  • “They continue to try to introduce extraneous issues to the negotiation that make an agreement less likely”

UBS is forecasting Brent crude oil to $125 by the end of this year

UBS citing ongoing tightness in supply globally for their view of rising oil prices in this back half of the year.

We continue to believe that the recent decline in oil prices does not fully account for constraints on global supply, and we expect the price to rebound to $125 a barrel by the end of the year

UBS add that they see the $125 level being maintained into the middle of 2023. And also say the higher price is supportive of energy stocks.

brent oil chart 19 August 2022