Oil prices fell on Thursday after speculation that Saudi Arabia is considering pumping more oil to address market demands.
“Brent crude is down by 2.43% at $113.46 per barrel while the US oil, Western Texas Intermediate is 2.44% down at $112.45 per barrel,” The Economic Times reported.
Saudi Arabia has likely expressed willingness to raise its oil production if Russia’s output falls substantially because of the Western sanctions imposed on it.
Speaking to the Times, Tsuyoshi Ueno, Senior Economist at NLI Research Institute said that Saudi would likely step in to pump more oil into the market because China is now gradually emerging from strict COVID-19 lockdowns and could help support prices.
Ueno said that investors are waiting to see whether Saudi Arabia would raise production in an immediate move to respond to the call by the UK, and EU, especially the US, for it to do so.
“We are not sure even if Saudi takes steps to accelerate its oil production, would it affect the global supply-demand balance,” Ueno said.
“Saudi Arabia is considering pumping more oil than planned to offset a decline in Russian crude production,” The Wall Street Journal reported, citing sources familiar with the development.
The agreement was made after senior US officials traveled to Saudi Arabia in recent weeks to broker a deal, the report said.
The paper also reported that some Organization of the Petroleum Exporting Countries (OPEC) considered suspending Russia from the agreed production plan in order to allow other producers to pump more crude oil.
Saudi Arabia had earlier refused the western countries’ call to increase its oil production in order to help reduce the price boom following Russia’s invasion of Ukraine.
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