Brent Crude, an important “benchmark oil” that serves as a barometer for the commodity’s price in general, squeaked out a closing price above $80 per barrel late Friday. However, according to a report from Reuters, Brent is still down for the second week in a row. US crude was also not spared and finished more than three percent down from the start of the week.
Much of the good news for the crude industry is coming from China, which imports more oil than any other country on earth. According to Reuters, data released by Beijing shows that the state was refining 12.49 million barrels per day, which is a new record. This is in spite the fact that the country showed abysmal third-quarter economic growth.
While China’s growing hunger for oil is a positive sign for suppliers, the impending US sanctions against Iran are still foremost in the minds of many members of the Organization of the Petroleum Exporting Countries (OPEC). While many OPEC countries have agreed to increase production to meet the deficit left by Iran’s supply, some are unsure if they can make it in time.
“OPEC and non-OPEC production increases have not quite equaled the loss in Iranian supply, giving the market concern about whether or not they will be able to fulfill the shortfall,” said Lipow Oil Associates’ president, Andrew Lipow, while speaking to Reuters.
Despite the sanctions, Iran is still attempting to sell its oil abroad. According to a report from Reuters, at least 22 million barrels of Iranian crude is expected to be shipped to China in the next several weeks by the National Iranian Tanker Company.
Further complicating the situation is the current backlash against Saudi Arabia in the wake of the death of journalist Jamal Khashoggi. According to CNBC, Khashoggi was killed inside the Saudi consulate in Istanbul, Turkey, after fighting with personnel inside.
There are already politicians in both the United States and the UK who are calling for the end of arms sales to the Gulf nation. According to a report from The Guardian, the Saudi government is currently taking steps to prosecute those responsible for Khashoggi’s death.
However, officials from Riyadh also reminded the world just how crucial their oilfields are. According to a report from Politico, Khalid Al-Falih, the Saudi Arabian minister of Energy, remarked that his country is the “central bank of the oil market,” during a conference in India.
“We expect and demand that Saudi Arabia’s efforts be acknowledged,” the energy minister said. “These supply disruptions need a shock absorber. The shock absorber has been to a large part Saudi Arabia.”
According to Politico, these statements might amount to more than just saber-rattling, and that the Saudi Arabian government might attempt to weaponize their crude oil exports as a way to fight back against any type of sanctions they may face.