Oil Slides as Report Says Saudi Arabia Prepared to Boost Supply
2022.06.02 04:50
Oil Slides as Report Says Saudi Arabia Prepared to Boost Supply
(Bloomberg) — Oil tumbled below $113 a barrel following a report that Saudi Arabia is ready to pump more should Russian output decline substantially due to financial sanctions because of the war in Ukraine.
West Texas Intermediate futures slumped as much as 3% in early Asian trading after edging higher Wednesday. The Financial Times reported that Saudi Arabia had indicated to western allies that it is prepared to raise oil production. The news comes ahead of an OPEC+ meeting on Thursday that’s expected to see the group ratify a modest increase in output for July.
The war has fanned inflation, driving up the cost of food to fuels and led to aggressive monetary tightening by central banks. JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon warned investors to prepare for an economic “hurricane” as the economy struggles against an unprecedented combination of challenges.
OPEC+ is expected to rubber-stamp a production increase of 430,000 barrels a day for July, although the cartel has struggled to meet its supply targets over recent months. The group’s actions have also failed to quell a volatile market that’s been whipsawed by Russia’s invasion of Ukraine.
Oil capped a sixth monthly advance in May, the best winning streak since early 2011, as tightening markets due to the Russian war coincided with rebounding demand. Prices may rise further as the European Union edges toward a partial ban of Russian crude and as China cautiously emerges from virus curbs.
The American Petroleum Institute reported that US crude inventories fell by 1.18 million barrels last week, while gasoline stockpiles dropped by 256,000 barrels, according to people familiar with the figures. Energy Information Administration data is due late Thursday.
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