Oil prices are easing... or are they?

The underlying situation remains largely unchanged, with tight oil supplies and Iran continuing to threaten attacks against neighboring countries at any time, as well as targeting ships and vessels in the Arabian Gulf. Global spare oil capacity remains limited, while importing countries are searching for additional supplies to build up or replenish their inventories and prepare for potential emergencies.

Kamel Al-Harami

This is also an effort to avoid desperate buying in the event of further supply disruptions. Although oil markets appear tight and increasingly vulnerable to threats, Europe seems to be relying heavily on US imports.

Meanwhile, the United States continues to secure Venezuela’s oil production for shipment to its own market. These developments point to different and sometimes conflicting directions in the global oil market, without a clear overall trend. Time is also running out ahead of the peak demand season in the United States and Europe. However, it remains uncertain whether the US will have sufficient export capacity to meet additional international demand. Also, 15 of Russia’s 38 major refineries are completely shut down, leaving only 23 major facilities operational.

This raises questions about Russia’s ability to maintain its exports and meet domestic demand. Another major concern is whether Russia can secure sufficient imports from abroad and for how long it can continue exporting petroleum products to the United States.

The reported volume of these exports stands at approximately 300,000 tons, with expectations of an increase. With the winter months approaching and a contract covering one million tons for the remainder of its term, the oil industry will become aware of the extent of the damage infl icted on Russian oil facilities by Ukraine.

Under these circumstances, Russia may eventually be forced to import petroleum products to meet its local consumption requirements. This could further alter the direction of oil prices during the coming winter months, tightening product markets and putting additional upward pressure on prices. All these factors suggest that oil prices may remain around the $100-per-barrel level or higher, potentially for the remainder of this year and perhaps until the end of the third quarter of next year.