Brent crude oil prices, which serve as a reference for Angolan oil sales, approached $95 per barrel on Monday, as investors kept a close eye on the prospect of a growing supply deficit in the fourth quarter. This comes after Saudi Arabia and Russia extended their supply cuts.
Brent futures rose by 62 cents to $94.55 per barrel at 1:22 PM in Angola, while West Texas Intermediate (WTI) crude oil futures from the United States increased by 72 cents to $91.49.
Both Brent and WTI prices have been on the rise for three consecutive weeks, reaching their highest levels since November and heading towards their largest quarterly increases since the beginning of the Russia-Ukraine conflict in the first quarter of 2022.
Yesterday, Citi became the latest bank to predict that Brent prices could surpass $100 per barrel this year.
Saudi Arabia and Russia extended their combined 1.3 million barrels per day (bpd) production cut this month until the end of the year. These restrictions could lead to a 2 million bpd supply deficit in the fourth quarter and subsequently reduce stocks, potentially exposing the market to new price spikes in 2024.
It remains to be seen whether the cuts will be extended into the next year, as Callum Macpherson, an analyst at Investec, stated, “given the risk that higher prices will eventually stimulate U.S. shale oil production.”
However, concerns about demand persist. China, considered a key driver of oil demand growth, poses a significant risk due to its slow economic recovery post-pandemic, despite maintaining robust oil imports.
