Adedapo Adesanya
By Adedapo Adesanya
The Organization of the Petroleum Exporting Countries (OPEC) daily basket price hit a five-month high of $45.87 per barrel on Tuesday, August 25.
This indicated a 1.5 per cent or 68 cents day-on-day increase when compared with the $45.19 per barrel it traded on Monday, according to OPEC Secretariat calculations released on Wednesday.
This happened as a storm in the Gulf of Mexico pushed producers to take back at least 1.5 million barrels per day of US offshore oil production from the market, creating chances for crude from other countries.
According to reports, Hurricane Laura is expected to strengthen into a major hurricane with 115 miles per hour winds when it strikes the coast near the Texas-Louisiana border early Thursday and this could shut off refining capacity.
Also helping prices, the American and Chinese trade officials reaffirmed their commitment to a phase one trade deal signed earlier this year.
Known as the OPEC reference basket of crude oil, the OPEC basket, a weighted average of oil prices from different OPEC members around the world, is used as an important benchmark for crude oil prices.
The OPEC Reference Basket of Crudes is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
In other OPEC related news, some members of the OPEC+ group of oil-producing nations would need to slash output by an extra 2.31 million barrels per day to make up for their recent oversupply.
The surplus seen between May and July ought to be compensated for in August and September.
OPEC+ which includes members of the oil cartel and other producers including Russia – stepped up their joint output cuts to a record 9.7 million barrels per day in May before tapering them to 7.7 million barrels per day this month.
In April the impact of the new coronavirus on air and road travel and other areas of the global economy sent benchmark oil prices below $16 per barrel.
The ongoing spread of the virus is now threatening oil demand recovery forecasts with OPEC+ expecting oil demand in 2020 to fall by 9.1 million barrels daily, 100,000 barrels per day more than in its previous forecast, before rising by 7 million on a regular basis in 2021.
