Global crude oil inventories dropped in August, reflecting “fundamental market tightness”, according to cargo tracker Vortexa.
Fresh cues of global oil demand growth in recent days are “not looking particularly bad,” Vortexa said in a report. “Stocks of crude and products, onshore and offshore, have been drawing and provide a limited cushion against future supply shortfalls,” it further added.
Meanwhile, “OPEC+ barrels continue to arrive at a normal rate for now, made possible by sea stock draws of Saudi grades by 1.5mbd [1.50 million b/] in August,” Vortexa analysts said in the report.
Earlier this month, OPEC’s de-facto leader Saudi Arabia pledged to extend its voluntary oil supply cuts of 1 million b/d, while its ally Russia announced to cut crude exports by 300,000 b/d till the end of 2023.
“All five Arab grades have seen a drastic decline in volumes at sea over the month of August, by 45mb [45 million bbls] or close to 1.5mbd [1.5 million b/d],” said David Wech, chief economist at Vortexa. “That means, while Saudi Arabia has exported much less of its crude, more has been arriving at clients’ ports,” he added.
The reported also noted that OPEC+ cuts have been mostly shouldered by Saudi Arabia alone, while all other member nations have shown “barely lower export levels.” Meanwhile, African oil exports rose marginally in August amid onshore stock draws.
Additionally, Vortexa has estimated that Saudi Arabia’s crude exports through the end of 2023 will meet peak winter demand. “From that perspective, it looks questionable whether Saudi Arabia can really maintain production and export levels at the lows of August throughout the end of the year, without tightening the market drastically and pushing [oil] prices far beyond the $100/b [bbl] threshold,” Wech added.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!