Reports of yet another US SPR drawdown caps crude gains

Front-month ICE Brent has decreased by $0.76/bbl on the day, to $91.11/bbl at 09.00 GMT.

PHOTO: A major SPR release could weigh heavily on Brent. Getty Images

Upward pressure:

Karine Jean-Pierre, White House press secretary, said that US-Iran negotiations to revamp the 2015 nuclear deal have been stalled, while noting that "diplomacy will always be an option." The EU's foreign policy chief Josep Borell, who has been a mediator between US and Iran, says progress is unlikely.

Downward pressure:

The US-Saudi Arabia oil spat has intensified further as sources tell Bloomberg that the Biden administration has chalked out a plan to release another 10-15 million bbls of crude from its strategic petroleum reserve (SPR) in a move bring oil prices lower.

Amrita Sen of Energy Aspects has told CNBC that the possibility that the US is weighing an emergency release of as much as 100 million bbls and that the oil market is “really worried” that a big SPR release will “flood the market” and push prices down.

The US Energy Information Administration (EIA) has lowered its global oil production forecast, now expecting production to average 100.7 million b/d in 2023, down 600,000 b/d from its previous estimate.

Given geopolitical factors, uncertain OPEC+ production, and fear of a global recession hurting demand, the EIA expects Brent to average around $93/bbl in the fourth quarter, and $95/bbl next year.

By Konica Bhatt.

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