A harsh summer is likely to prompt Saudi Arabia to make more crude oil available for power plants; so that it can continue to work; To cope with the very high temperatures, which in turn enhances the increase in the demand for oil in the Kingdom, and then there are indications of an increase in oil prices during the coming months.
It is expected that the Gulf country will increase the supply of power plants to 800,000 barrels per day during the summer, according to what was published by the agency. bloombergquoted by a global oil and gas analyst.
This comes as Saudi Arabia proceeds with its voluntary decision to reduce crude oil production, in an attempt to control prices and confront speculators, according to what was seen by the specialized energy platform.
electricity in Saudi Arabia
Global oil and gas analyst at Macquarie Group, Vikas Dwivedi, said that Saudi Arabia’s use of crude oil in electricity generation may rise to 800,000 barrels per day during the summer season as a way to absorb excess supplies from the market.
It should be noted that the average summer temperature in the Gulf country can reach 43 degrees Celsius.
Dwivedi said, in an interview: “There are indications that officials in the Kingdom may make more crude oil available for electricity production compared to previous years under the global supply management plan.”
He added that this step is likely to give a boost to oil prices – which recently fell below $70 a barrel – as this trend is expected to lead to an increase in prices to nearly $80 a barrel during the third quarter of this year.
During the past year 2022, demand for crude oil in Saudi Arabia to generate electricity increased to 671,000 barrels per day – between June and August, an increase of 53% over the previous 3 months, according to data from the Joint Organizations Data Initiative (JODI).
oil market
This step on the part of Saudi Arabia may reinforce the view that the demand for oil can increase during the next stage. Hence the price increase.
The Organization of the Petroleum Exporting Countries (OPEC) had expected an increase in oil demand by about 2.33 million barrels per day during the current year (2023), bringing the total to 101.90 million barrels per day, according to the organization’s monthly report issued on May 11.
During the first week of this June, the Kingdom officially announced the extension of the voluntary cut in oil production by 500,000 barrels per day until the end of 2024.
On April 3, 2023, 9 OPEC+ countries announced a voluntary cut in oil production, with a total volume of about 1.66 million barrels per day.
The following graph – prepared by the specialized energy platform – shows the 9 countries that have voluntarily reduced production, and the volume of reduced production:
According to what was announced by the Gulf country, it is expected – during next July – to increase the voluntary reduction in Saudi oil production to 1.5 million barrels per day, represented by 500 thousand barrels per day, which is the amount of the reduction announced last April, in addition to one million barrels per day for a month. One, extendable.
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2023-06-10 13:32:03
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