with agency report
Lagos — International oil benchmark, Brent crude fell on Monday after climaxing above $70 earlier in the month.
Brent which had hit $71 for the first time in over 14 months, however, dropped to $68.8 per barrel at 10:33AM Nigerian time on Tuesday.
After a gradual rise since the 2020 pandemic abated, oil surged on Thursday after OPEC and its cut partners decided pause on production cuts for another month, surprising the market. Brent, OPEC crude and WTI shot up more than 4% afterwards During early Friday, with Brent climbing above $70 per barrel.
After the price surge which the market expected would continue, Saudi Arabia’s energy ministry reported a drone attack on March 7 morning that hit a petroleum storage tank at the Ras Tanura port.
The drone attack has since spurred fears of global supply disruptions and price inflation described by S&P Global Platts as “a confluence of bullish political and economic developments provided further tailwind to the market”.
The Ras Tanura port is one of the world’s largest oil shipping ports with 33 million barrels of storage capacity and three terminals that export all of Saudi Arabia’s key crude oil grades, in addition to exporting condensates and refined products.
Saudi’s supply disruption adds to its already running pledge to cut an additional one million barrels per day of its crude production in February, driving total output by OPEC+ to a four-month low, according to the latest S&P Global Platts survey.
OPEC’s 13 members pumped 24.86 million bpd, a decrease of 840,000 bpd from January, while its nine partners added 12.97 million bpd, a rise of 60,000 bpd.
The OPEC+ produced 37.83 million bpd, its lowest since October, putting the group’s compliance with its quotas at 113.5 percent, according to the survey.
Even without Saudi’s pledge to cut an extra one million output, OPEC+ compliance to the cut still rests at 99.5 percent, according to Platts calculations.
Saudi Arabia is the world’s largest exporter of crude with an average 8.13 million bpd of production in February, down from January’s 9.11 million bpd and well below its quota of 9.12 million bpd.
At OPEC+ March 4 meeting, the group agreed to roll over most quotas for another month, except for a 125,000 bpd rise granted to Russia and a 20,000 bpd increase allowed for Kazakhstan. Saudi Arabia will maintain its voluntary one million bpd cut, as well, to continue tightening the market.
Despite price surge due to the cuts, the market is still plagued with looming seasonal refinery maintenance which could further drive down supply, there is still-high oil inventories, a largely grounded aviation sector, and continued lockdown measures in many countries.