October WTI crude oil prices closed down $2.43 (-2.37%) on Friday, following a 6.7% rally the previous day, while October RBOB gasoline fell by $0.0860 (-2.53%). The International Energy Agency (IEA) has warned that high oil prices and restricted supply will lead to the largest drop in global oil demand since the COVID-19 pandemic, increasing its global oil deficit estimate for the year to 1.7 million barrels per day (bpd) from 1.3 million bpd. Delays in returning to a global oil surplus are now projected until 2027.
Amid escalating tensions due to the US-Iran conflict, Iran has indicated readiness for intensified military actions, potentially impacting crude oil supplies from the Middle East. Concurrently, Yemen’s Houthi rebels have targeted Saudi energy facilities, resulting in Saudi crude production dropping to 6.238 million bpd in August—its lowest level since 1990. In August, the Saudi oil production saw a further decrease as exports fell to about 3 million bpd, the lowest in nine years.
Additionally, the U.S. Energy Information Administration (EIA) reported a smaller-than-expected decline in crude inventories, down 391,000 barrels, while U.S. crude production reached a record high of 13.947 million bpd during the week ending September 4. Baker Hughes noted a slight increase in active U.S. oil rigs, rising to 450 for the week ending September 11, yet remaining below the 1.25-year high of 455 rigs recorded in mid-August.
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