Today brings another steep sell-off in the petroleum complex, with across-the-board losses for oil products accompanying a broader financial sell-off that began in China’s stock market. Crude oil is currently trading at $67.40, down $1.96 (-2.8%).
Fuel prices are also taking a big hit this morning after mixed trading yesterday. Diesel prices are currently $2.2768, down 4.1 cents (-1.8%) from yesterday’s closing price. Gasoline prices are $1.8618, shedding 4.5 cents (-2.4%).
The majority of today’s dip is linked to weak performance in equity markets, but Saudi Arabia’s consideration of raising production is certainly adding fuel to the fire (pun intended). Amid ongoing controversy related to the death of Khashoggi, Saudi Arabia has promised not to play oil politics, and even mentioned potentially increasing production by 1-2 million barrels per day.
While Saudi Arabia has been talking about increasing production, Iraq has actually gone out and done it. OPEC’s second largest producer, Iraq is currently pumping 4.8 million barrels per day, a number that will rise to 5 million next year and to 7.5 million by 2024. Still, as a recent Bloomberg article noted, the country struggles with basic electricity infrastructure, making it a shaky investment area. Iraq has suffered production setbacks before related to political and social unrest, making them a key risk area when evaluating 2019 supply and demand balance.