OPEC cuts reignite inflation fears as energy prices rise

Lallalit Srijandorn FXStreet

The International Energy Agency (IEA) warned earlier this week that oil market deficits would worsen in the fourth quarter.

The summer-announced oil production cuts by Saudi Arabia and Russia exacerbated the situation. However, insufficient refineries are another reason why the world's inventories of intermediate distillates are so much lower than usual.

The situation is particularly significant in Europe and North America since a number of refineries were shut down and others converted to biofuel production facilities during the outbreak. The remaining capacity seems to be enough for producing petrol in response to demand but insufficient for producing diesel fuel and other middle distillates demand.

Market reaction

Crude oil prices continue to advance following this headline. As of writing, the barrel of West Texas Intermediate (WTI) is down by 0.35% trading at $90.02

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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