Oil prices surged to the highest settlement in 2023, driven by concerns over tight global supplies. U.S. crude stocks fell more than expected, with a decrease of 2.2 million barrels to 416.3 million barrels. Additionally, crude stocks at the Cushing storage hub in Oklahoma dropped by 943,000 barrels to their lowest level since July 2022. These stock drawdowns have been attributed to production cuts by OPEC+ countries, particularly Saudi Arabia and Russia, who have reduced output by 1.3 million barrels per day until the end of the year. Concerns have been raised regarding the quality of the remaining oil at the Cushing hub, as it approaches historic low levels, and the potential impact on minimum operating levels.
President Vladimir Putin of Russia has instructed the government to stabilize retail fuel prices in response to a significant increase caused by higher exports. As a result, the deputy prime minister mentioned the possibility of restricting exports of oil products purchased for domestic use, further tightening the market. These developments indicate the growing efforts of oil-producing nations to address rising fuel prices and ensure market stability.
Overall, the combination of falling crude stocks, production cuts by OPEC+ nations, and measures taken by Russia to stabilize fuel prices has led to a surge in oil prices. Concerns about the remaining oil supply at the Cushing hub and its impact on minimum operating levels highlight the importance of balancing production and demand to maintain a stable market.