written by Yu Chunting Hu Xiaonan
Global oil prices fell rapidly
According to the Economic Daily on August 24, during this round of refined oil price adjustment cycle (August 9-August 22), international oil prices fluctuated and fell. On average, the price of WTI in London and New York fell by 4.03% compared with the previous round of price adjustment cycle. China's domestic refined oil prices usher in a "five consecutive drops". The National Development and Reform Commission html released a message on the 223rd that according to the recent changes in the international market oil prices and the current refined oil price formation mechanism, from 24:00 on August 23, 2022, the domestic gasoline and diesel prices will be reduced by 205 yuan and 200 yuan per ton respectively.
According to calculations, after this price adjustment is converted into a price increase, No. 92 gasoline is reduced by 0.16 yuan per liter, and No. 0 diesel is reduced by 0.17 yuan per liter. Based on an ordinary private car with a fuel tank capacity of 50L, adding a tank of fuel will cost about 8 yuan less. Some analysts said that the average cost of every 100 kilometers of vehicles traveling is about 1.2 yuan for vehicles that consume 7L-8L per 100 kilometers in the city. For large logistics and transportation vehicles with a load of 50 tons, the average fuel cost per 100 kilometers traveled is reduced by about 6.8 yuan.
data shows that in August, international oil prices fell sharply due to multiple factors. On August 21, the opening price of US WTI crude oil was US$89.65 per barrel, a far cry from the high of US$130 this year and down 1.2% from the closing price of the previous trading day. On August 22, the European Brent crude oil opened at US$93.07 per barrel, down 1.2% from the closing price of the previous trading day, falling below the US$95 mark for the first time since the conflict between Russia and Ukraine, and hit a new intraday low of US$91.51 per barrel on August 17.
Some experts say that three main factors, including the increase in production in some oil producers, the relaxation of oil restrictions on Russia, and the global economic recession, are the reasons for the rapid decline in global oil prices.
First, the world's major oil-producing countries represented by Libya agreed to increase oil production. html In July, Libya's oil minister said that the country's average daily oil production recovered to 1.2 million barrels, doubling from the end of June, and has rebounded from the level of html from January to early April. This production increase action has cooled the high-income global oil market significantly.
Second, European governments have relaxed restrictions on exports to Russian oil due to concerns about rising crude oil prices and tightening global energy supply. The UK Financial Times reported in early August that in addition to excluding Russia from the maritime insurance market, the EU has also revised the previous sanctions against Russia and allowed some European companies to trade with Russian oil company to transport oil to countries outside the EU.
Third, expectations of global economic recession are increasing . Global second-quarter economic data show that major Western countries inflation , China's economic growth slowed down, and the US economy shrank for two consecutive quarters. These data may aggravate people's concerns about the upcoming recession and lead to a slowdown in energy demand. Data shows that the global average daily demand for oil in the second quarter of 2022 was 98.56 million barrels, slightly lower than the average daily demand for oil in the first quarter.
The oil market is turbulent, and crude oil price fluctuations may intensify in the future
. On the other hand, "OPEC+" believes that the current oil price has fallen too quickly, and it will take measures to stabilize oil prices. At the same time, it may intensify the fluctuation of crude oil prices, including the intensification of European gas shortage, restricted Russian oil exports, and political instability in many oil-producing countries.
Europe is facing Natural gas shortage is becoming increasingly fierce, and European gas prices soar again. html European natural gas prices rose to 243.11 euros per megawatt-hour on August 16, an increase of more than 10% from the previous day. Since July 27, the gas transmission volume of the natural gas pipeline " Nord Stream-1" from Russia to Germany has dropped to 20% of the full load transmission volume. Gazprom PJSC said that the reason for the reduction in gas transmission volume is that another turbine is to be repaired.On August 22, the company said it would close its Nord Stream gas pipeline to Germany later this month for three-day maintenance. European politicians have suggested that Russia may completely shut down natural gas this winter, and even if Germany is already struggling to deal with rising prices, it will lead to soaring food and energy prices and plunging into a recession.
in response to "severe supply disruption", Saudi and the UAE are ready to "significantly increase" oil production. Reuters reported on August 4 that sources familiar with the ideas of major oil exporters in the Gulf region said that if the world faces a serious supply crisis this winter, Saudi Arabia and the UAE are ready to "significantly increase" oil production. A source revealed that the OPEC member states have about 2 million barrels to 2.7 million barrels of idle production capacity per day. But he also said Saudi Arabia and the UAE could "significantly increase" oil production, but would only do so if the supply crisis worsens.
In addition, the political instability of oil-producing countries such as Libya, Syria and Iraq affects production. Libya has Africa's largest crude oil reserves, and its fragile oil production has rebounded to a normal level of 1.2 million barrels per day since August, but there are still serious political differences within Libya. Without a solution, it will be difficult for Libya's national oil company to maintain its current crude oil production. According to CCTV News, the Syrian Ministry of Petroleum and Mineral Resources previously announced that more than 80% of Syria's average oil production in Japan was plundered. Syria, once an oil-producing country, currently has to rely on imports to meet demand, which also means that there are problems such as insufficient energy supply and rising oil prices in Syria as international oil prices rise. Iraq has more than 150 billion barrels of crude oil reserves, accounting for 12% of the world's proven oil reserves, but the country's political situation has fallen into a long-term instability in the post-Saddam era. According to Wenhui News on August 18, Iraq's "anarchy" deadlock has entered its 10th month, and the disorder of political identity has led to continued political turmoil.
The above factors will lead to turmoil in the oil market. Under the combined effect of increasing global energy demand in autumn and winter, oil prices may rebound significantly. Some analysts believe that the market is still worried about the outlook for the economy and demand, but the expectation of tightening supply continues, and the probability of a higher price increase in China's domestic refined oil price adjustment is relatively high.
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