Saudi Arabia has just made an announcement in regards to increasing its production of crude oil. According to Saudi Arabia, it will significantly increase its production of crude oil if the production of oil falls in Russia.
As per the daily updates, the reduction in the production of crude oil in Russia would be due to the sanctions imposed by the European Union. Right after the announcement made by Saudi Arabia regarding oil production, the oil prices have started to drop.
Saudi Arabia Critically Monitors the Oil Market
According to the report published by The Financial Times, Saudi Arabia has been keeping a very keen eye on the global oil situation. The Saudi Arabian officials have stated that they are closely monitoring the oil supply chain throughout the world.
They are closely monitoring the shortage of oil supply and thus, it wants to keep the oil prices under control. The Saudi official stated that it would be completely unfavorable for them if the oil prices increase.
Oil Prices Experience a Dip
Following the announcement made by Saudi Arabia, the prices of oil have started experiencing a downfall. The drop was recorded during the trading hours in Asia.
The oil market data shows that a 2.12% drop was recorded in the Brent crude futures’ international benchmark. The price has now dropped to $113.82 per barrel. Then a 2.18% drop has been observed for the US crude futures, bringing the oil price down to $112.75 per barrel.
Saudi Arabia Makes another Announcement
While making the announcement, Saudi Arabia has confirmed that it is not necessary from their end. It is something that they are considering but it is not a promise from their end. However, once again, Saudi Arabia has thrown a bone at the West.
Ban Imposed on Russia’s Oil Production
It was on Monday when the leaders of the European Union decided that a 90% ban will be imposed on Russia’s crude oil production. It has been confirmed that the ban has been imposed as the sixth sanctions package by the bloc that was to be imposed on Russia.
The sanctions were imposed on Russia because of its invasion of Ukraine and to this day, Russia continues with its invasion. The EU leaders have decided that the ban will be implemented by the end of the running year.
In recent months, it was the ongoing war between Russia and Ukraine that resulted in the oil prices going higher.
Saudi Arabia’s Comments on the Situation
Saudi Arabia, which is the leader of the OPEC, has stated that for now, they are observing no shortages of oil in the markets. However, it is possible that the demand may rise as the world is coming back to normal after the pandemic.
The announcement by Saudi Arabia has offset many oil companies in terms of their share prices. Most importantly, it may also record a drop in the prices of oil in the commodity trading sector.