The extension of voluntary crude output cuts by Saudi Arabia and Russia until the end of 2023 is set to substantially bring down global inventories over the remainder of the year. The two largest Opec+ producers confirmed the extension last week (MEES, 8 September), and key global benchmark Brent has been consistently above $90/B since (MEES, 15 September).
Closely watched industry reports released this week point to hefty global inventory drawdowns as a result of the cuts, but with a huge range. Opec’s own numbers are the most bullish, with an implied Q4 supply shortfall of 3.1mn b/d, followed by the IEA on 1.1mn b/d. However, the US’ EIA is much more sanguine on the outlook for the remainder of the year, stating in its September STEO report that “our current assessment is that global oil inventories are falling by 0.6 million b/d in 3Q23. Inventory draws moderate to 0.2 million [b/d] in 4Q23.” (CONTINUED - 804 WORDS)