Oil prices ease as Russia output increases

Oil prices eased on Thursday, reversing course from the previous session, as rising output from Russia and worries about a potential global recession weighed on futures

Stephanie KellyReuters
Published : 18 August 2022, 03:01 AM
Updated : 18 August 2022, 03:01 AM

Oil prices eased on Thursday, reversing course from the previous session, as rising output from Russia and worries about a potential global recession weighed on futures.

Brent crude futures fell 33 cents, or 0.4%, to $93.32 a barrel. US crude futures fell 40 cents, or 0.5%, to $87.71 a barrel.

Prices rose more than 1% during the previous session, although Brent touched its lowest level since February.

Futures have fallen over the past few months, as investors have pored over economic data that has spurred concerns about a potential recession that could hurt energy demand.

British consumer price inflation jumped to 10.1% in July, its highest since February 1982, intensifying a squeeze on households.

Overall India, the world's third biggest oil importer and consumer, shipped in 3.2% less oil in July at 4.63 million bpd from June as some refineries planned maintenance turnaround from August, the data showed.

India's oil imports from Saudi Arabia rose by 25.6% to 824,700 bpd in July, the highest in three months, the data showed, after the producer lowered official selling price (OSPs) in June and July compared with May. Saudi Arabia stayed at No. 3 spot among India's suppliers.

"Most refiners have term contracts with Saudi Arabia so they can adjust slightly but they can not cut drastically ... They might have used lower OSPs for June and July to meet their commitments under the term contract," said Ehsan Ul Haq, an analyst with Refinitiv.

In supply, Russia has started to gradually increase oil production after sanctions-related curbs and as Asian buyers have increased purchases, leading Moscow to raise its forecasts for output and exports until the end of 2025, an economy ministry document reviewed by Reuters showed.

Russia's earnings from energy exports are expected to rise 38% this year partly due to higher oil export volumes, according to the document, in a sign that supply from the country has not been affected as much as markets originally had expected.

Saudi Arabia's crude oil exports rose in June, while output increased to a more than two-year high, data from the Joint Organizations Data Initiative (JODI) showed on Wednesday.

Meanwhile, the market is awaiting developments from talks to revive Iran's 2015 nuclear deal with world powers, which could eventually lead to a boost in Iranian oil exports.

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