Commodities
Does Saudi Arabia control oil prices: preparing for unprecedented oil price hike

Riyadh will not be deterred by the fact that traders are treating record price increases as a big risk. Many are wondering if Saudi Arabia controls oil prices.
Bloomberg expects Saudi Arabia to raise the price of its main crude, Arab Light, for Asian buyers by record levels despite forecasts that the oil market may be slightly depressed in September. Representatives of five refineries surveyed by Bloomberg cite a price at a premium to the region’s main oil brand, Dubai, of $10.8 a barrel. Forecasts also show that given the market’s slump in the first month of fall, a price increase could take demand for additional barrels off the market.
Saudi Arabia traders against shorting oil prices
Global crude oil prices in July showed a month-long decline for the first time since late 2020 as traders tried to put the risks of an incoming U.S. recession, monetary tightening by the central banks of major economies and China’s repeated attempts to beat Covid-19 into the price. Despite the decline, the physical parameters of the oil market remain strong.
A lot of Asian refiners seem to be planning to cut production in September after maxing out refining in the last few months. As previously known, Saudi Arabia raises July crude oil prices to Asia.
The bullish inertia of Middle Eastern crude will peak for October shipments as early as August. In making that prediction, traders relied precisely on a marked decline in refinery output. In the month since the end of June, the price difference between gasoline and crude in Asia has dropped more than 70%, and 39% for diesel.
Many expected Saudi Arabia to reduce oil prices, but in fact we have the opposite situation. The premium for Murban crude from Abu Dhabi with delivery in October is down at least $1 per barrel on the spot market compared to oil with September shipments. Physical cargoes of Murban crude, preferred in Japan, South Korea, and Thailand, with September shipments sold at a premium of more than $10 a barrel to Dubai, the Middle East’s main crude brand, in July.
Commodities
Brent crude oil futures its lowest since 2021 amid banking crisis

The cost of May futures on Brent crude oil fell to $72.74 per barrel, losing 0.31%, according to data from the ICE exchange. Brent was trading at about $70 a barrel at its low for the day. That’s a record low for at least 15 months, that is, since December 2021.
WTI prices are also falling, with futures prices down to $66.43 a barrel (-0.46% from last week’s close), according to the exchange. WTI was trading at $64.12 a barrel at its low for the day. This is also the lowest value since at least December 2021.
The market is thus responding to the banking crisis: since the beginning of March, three banks (Silvergate Bank, Silicon Valley Bank, Signature Bank) have closed their doors in the US, and the day before, on March 19, Swiss UBS took over its rival, Credit Suisse, buying the bank for $3.2bn amid fears of its collapse. Investors fear a recession, which may cause a crisis in the banking sector, as a recession, in turn, would lead to lower demand for fuel, the agency said.
“Oil prices are moving mainly because of fears [of further oil price dynamics]. Supply and demand fundamentals are almost unchanged, only the banking problems have an impact,” said Price Futures Group analyst Phil Flynn.
Oil prices lifted from daily lows helped the S&P 500 and Dow Jones indices, which rose Monday, writes Reuters. Traders raised their expectations that the U.S. Federal Reserve would refuse to raise rates this Wednesday to protect financial stability amid banking problems, the agency noted.
“Volatility is likely to persist this week, with broader financial market concerns likely to remain at the forefront,” ING Bank analysts said in a note. They add that the impending Fed decision adds to uncertainty in markets.
Earlier we reported that the price of Brent dropped below $75 per barrel for the first time in more than a year.
Commodities
Gold prices will reach $2,075 “in the coming weeks”

Gold prices may continue to rise, analysts polled by the CNBC TV channel said. In their opinion, the difficulties of banks and a possible turning point in the policy of the Federal Reserve indicate the possibility of a new rise in gold prices.
“I think it’s likely that we’ll see a strong move in gold in the coming months. The stars seem to be aligned for gold, and it could soon break new highs,” said Craig Erlam, senior market analyst at brokerage Oanda.
The expert explained that interest rates are now at or close to their peak, and the market, amid recent developments in the banking sector, is laying on an earlier than previously expected start of rate cuts. They also added that this situation would boost demand for gold even if the U.S. dollar weakens.
This month, Fitch Solutions rating agency predicted that gold prices would reach $2,075 an ounce “in the coming weeks” amid global financial instability, writes RBC. The company also added that gold prices will remain at a higher than pre-pandemic levels in the coming years. Craig Erlam confirmed this forecast.
Other Wall Street experts are also predicting a long-term rise in gold prices. For instance, Tina Teng, analyst for British financial company CMC Markets, thinks that the U.S. Federal Reserve’s sooner departure from its policy of raising interest rates might provoke another rally in gold prices due to the weakening U.S. dollar and falling bond yields.
Earlier we reported that oil prices accelerated their decline, continuing a trend from the beginning of the week.
Commodities
Analysts at U.S. bank Goldman Sachs revised its forecast on oil prices

Analysts at U.S. bank Goldman Sachs, one of the most optimistic forecasts about the cost of oil, changed its earlier forecast about the growth of oil prices to $100 in the next 12 months, Bloomberg said.
Now analysts predict that Brent crude oil will reach $94 per barrel in the next 12 months and $97 per barrel in the second half of 2024, the publication said.
The bank said oil prices have fallen despite rising demand in China, given pressure on the banking sector, recession fears and investor withdrawal.
“Historically, after such traumatic events, price adjustments and recoveries are only gradual,” the bank notes.
This week, the situation surrounding Swiss bank Credit Suisse triggered panic in the markets as oil plummeted to a 15-month low and Brent crude fell 12% to below $73 a barrel.
After the price decline, the bank expects OPEC producers to increase production only in the third quarter of 2024, contrary to Goldman’s forecast that it will happen in the second half of 2023. Analysts at the bank believe a barrel of Brent blend will reach $94 in the next 12 months and trade at $97 in the second half of 2024.
Bloomberg reported that the largest oil exporter, Saudi Arabia, announced higher April oil prices for markets in Asia and Europe.
Earlier, we reported that Iraq and OPEC advocated for guarantees of no fluctuations in oil prices.
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