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OAPEC Secretary General HE Jamal Essa Al Loughani reviews global oil markets situation a year after the Russian-Ukrainian crisis

Commenting on global oil market developments, the Secretary-General of the Organization of Arab Petroleum Exporting Countries (OAPEC), HE Eng. Jamal Essa Al Loughani, indicated that a year after the Russian-Ukrainian crisis, global oil markets are experiencing a state of uncertainty, which has reflected in turn on their future prospects. He said that the sanctions imposed on Russia made Europe more dependent on the Middle East countries, especially OAPEC members and the United States of America to meet their energy needs.

Al Loughani added that the Russian-Ukrainian crisis has relatively contributed to the decline in the growth rate of global oil demand during 2022 compared to the previous year, to remain below its levels recorded before the COVID19 pandemic. Demand has been negatively affected by a number of factors, including high oil prices, slowdown in the performance of global economy, and restrictions associated with China's Zero - Covid policy.

Al Loughani indicated that the impact of the Russian-Ukrainian crisis on supplies in 2022 was much less than what was expected at the beginning of the crisis, as Russian oil production proved resilient and recovered quickly, thanks to the success of Russian oil companies in finding new buyers for their oil exports. Although the majority of forecasts indicate a decline in Russian oil production in 2023, this decrease may be less than expected, in light of the continued flow of Russian oil exports to their Asian destination.The Secretary General said that the Russian-Ukrainian crisis led to an increase in the stock of oil in transit in light of the change in the course of oil trade flows. The USA resorted to using its strategic oil stocks as a tool to manage the oil market, through withdrawals from those stocks in collaboration with the rest of the OECD countries. Al Loughani explained that crude oil prices were not immune from the repercussions of the Russian crisis, as they witnessed sharp fluctuations in their levels.  During March 2022, Brent crude oil prices approached the $140/barrel benchmark, and West Texas crude oil prices crossed the $130/barrel threshold. These are the highest levels recorded since July 2008. Coinciding with expectations related to a slowdown in global economic growth, tightening monetary policy by raising interest rates by central banks around the world, and restrictions to contain the Corona virus in China, oil prices witnessed a decline in the second half of the year to settle at $79.7 per barrel.Among the other repercussions of the Russian-Ukrainian crisis that                       Al Loughani touched upon is forcing crude oil tankers to travel longer distances to reach buyers of Russian crude oil, which limited the availability of tankers and caused an increase in freight prices. The crisis also led to a massive shift in global oil trade flows and international oil trade relations within a very short period of time, with the emergence of a parallel market for tankers.In light of the above, Al Loughani stated that concerns related to energy security for European countries in particular and the ability to bear its high costs have become the main drivers of energy policy in these countries and at the world as well. He added that OPEC + countries, led by the Arab members of OAPEC, in the context of their endeavor to achieve stability and balance in the global oil market in light of the Russian-Ukrainian crisis, did not stand idly in the face of these developments, as they made relentless efforts in this regard.Al Loughani concluded by saying that OAPEC Secretariat General is monitoring global oil market developments closely due to their impacts on the revenues of its member countries, which are the main engine of economic and social development, and the main supporter of their central banks' foreign currency reserves. The Secretariat underscores the importance and effectiveness of the approach adopted by the OPEC + group, represented in taking proactive measures in anticipation of any emergency developments that the oil market may witness, which is a clear sign of reassurance from the group’s countries to the oil market. The Secretariat General also confirms that the decisions taken by the OPEC + group, on top of which the decision to cut production by 2 million b/d, had a clear impact on the stability and balance of the oil market, which is the goal that the countries of the group seek to achieve.