Mike Muller, the head of Vitol Asia, said global crude oil stocks had dropped to pre-pandemic levels and might face further tightening. Muller added that OPEC+ spare capacity is expected to be close to a critical level by mid-2020, owing to production hiccups in Angola, Nigeria, and other producers, as well as concerns in Libya, Venezuela, and Iran. At the same time, US producers are not investing enough to support future supply.
Amid the tight market, Saudi Aramco hiked all of its December OSPs for Asian, Mediterranean, European, and US customers. Muller said the OSP increase, particularly for Asia, was larger than expected. The increase came after Aramco cut its OSPs to Asia-bound cargoes for October and November loading by $1.40 and $1.70 per barrel, respectively.
OPEC+ producers agreed last week to raise supply as planned by 400,000 bpd for December, despite calls from the US and other consuming nations for more barrels. The group argued that demand is still affected by the COVID-19 delta variant. Dated Brent retreated from a three-year high of more than $85 per barrel in October to $82.75 per barrel on November 5. However, Brent is still up 64% from the beginning of the year.
