Oil prices fell on Tuesday morning as markets continued to focus on sluggish U.S. demand despite geopolitical uncertainty in Russia and promises of more robust economic stimulus measures from China, OilPrice reports. 

The Wagner group’s attempted mutiny in Russia this weekend grabbed plenty of media attention, but it has had a very limited impact on oil prices. Similarly, prices have failed to register the Tianjin speech of Chinese Premier Li Qiang, promising more robust stimulus measures from Beijing. Instead, markets have been focused on sluggish US demand, with WTI having switched into contango in its prompt months. Despite a slight US stock draw expected this week, demand in the country looks weaker than a month or two ago. 

Saudi Arabia still hopes for strong H2.Saudi Aramco CEO Amin Nasser stated that oil market fundamentals remain „sound” for the second half of 2023 and that demand strength in China and India will overpower the recession risks in developed markets, seeking to placate recessionary fears. The review of OPEC+ production quotas at the oil group’s Vienna meeting earlier this month will consolidate the control of Middle Eastern powerhouses, to the detriment of African countries that have struggled to maintain output. 

The five largest oil producers of OPEC+ (Saudi Arabia, Russia, Iraq, UAE, and Kuwait) all have major state-owned oil firms, implying that investments into new projects will not be an issue, but Nigeria and Angola rely on Western majors for know-how and their lowered production target might decrease their investment appeal. Capacity additions from Saudi Arabia, the UAE, and Kuwait over the 2020-2025 period will amount to 1.2 million b/d, double the capacity that Nigeria and Angola are expected to lose over the same period. Angola’s production capacity has dropped to 1.1 million b/d this year whilst Nigeria’s is at 1.5 million b/d, with African members now accounting for a mere 10% of OPEC+ production capacity. 

Saudi national oil company Saudi Aramco and France’s TotalEnergies have signed an $11 billion deal to build a new petrochemicals complex at the Satorp site in Jubail.