Last Thursday the International Energy Agency (IEA), announced a significant surge in its estimates on the global crude oil output for the year 2026 to 3.33 million barrels per day (bpd), which is an additional of 360,000 bpd compared to the previous estimated surplus. This surplus is largely attributed by OPEC+ plans to boost oil production, which will lower oil prices in the long run.
OPEC+ on the other hand, agreed to boost its production by 137,000 bpd starting October, which is actually less than expected increase of 547,000 bpd that OPEC+ agreed to output both in August and September.
Other factors impacting crude oil prices
Recent Ukraine attack on the Russian refineries and oil infrastructure, has had a bullish effect on oil prices as it limits Russian crude exports and tightens the global oil supply. Consequentially, the attack has disrupted around 300,000 bpd of refining capacity of Russia`s Salavat and Volograd oil refineries. Additionally, the Krishi refinery, which is one of Russia`s biggest refineries, halted crude oil processing after a damage caused by a recent Ukrainian drone attack. The Ukraine drawn and missile attacks have greatly slowed down Russia`s oil processing runs to 4.98 million bpd in the first three days of September, which was the lowest monthly average in over 3.25 years.
There has also been a report on a week-over-week decrease in crude oil storage of about 7.2% by Vortexa, which translates to low supply of crude oil.
The US Energy Information Administration (EIA), on Wednesday reported that crude oil inventories as of September 12 were 4.7% below the seasonal 5-year average. Gasoline and distillate inventories were also 5-year below the seasonal average by 1.6% and 7.4% respectively.
Future outlook
All the stated factors have varying influences on the price of oil globally and the interplay between these factors will determine the direction of crude oil prices in the near future.
