OPEC Plus, which includes OPEC member countries and allies led by Russia, agreed on Monday to slightly reduce oil production to boost prices that have fallen due to fears of an economic slowdown. Crude producers will cut production by 100,000 barrels per day, which is equal to 0.1 percent of global demand, in October, and they also agreed that a meeting might be held at any time to adjust production policy before the next meeting scheduled for October 5. The decision effectively maintains the status quo while OPEC faces severe fluctuations in oil prices, affected by multiple factors in both directions. Matthew Holland, an analyst at Energy Aspects, an energy research firm, said: “OPEC Plus is concerned regarding long-term volatility in prices due to weak macroeconomic confidence, weak liquidity, renewed Chinese shutdowns (to combat Covid-19), as well as uncertainty regarding a possible agreement between the United States and Iran. and efforts to impose a ceiling on Russian oil prices. Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries, last month signaled the possibility of cutting production to address what it sees as an exaggerated decline in oil prices. Brent crude fell to regarding $96 a barrel from $120 in June, amid fears of an economic slowdown and recession in the West. The decline in the price of crude also came once morest the backdrop of the possibility of an increase in supplies thanks to the return of Iranian crude to the market, if Iran succeeded in reviving the 2015 nuclear agreement with world powers. Iran is expected to add 1 million barrels per day to global supply, if sanctions are eased, although prospects for a nuclear deal appeared more murky on Friday. However, there are signs from the physical market that supply is still limited, many OPEC countries are producing less than targeted, and new Western sanctions threaten Russian exports. Russia has said it will halt supplies to countries that support the idea of capping prices for Russian energy supplies in the midst of the military conflict in Ukraine. Russia has also continued to reduce gas shipments to Europe, which will likely lead to further price hikes.
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OPEC Plus
Russia is concerned about “OPEC Plus” plans to reduce oil production Energy and minerals
written by Alexandra Hartman Editor-in-Chief
Today, Sunday, the Wall Street Journal revealed Russian opposition to reducing oil production at the present time, suggesting that “OPEC Plus” will maintain its oil production level when it meets tomorrow, Monday.
Sources added to the newspaper, that Moscow is concerned that the production cut may send a message to oil buyers that the supply of crude oil exceeds global demand, reducing its influence with consuming countries, which still buy Russian oil at large discounts.
The sources emphasized that Russia has benefited from high oil prices since the Ukrainian invasion, but that Moscow is more concerned regarding maintaining its influence in negotiations with Asian buyers, who have already bought its crude, following the Europeans and the United States began to avoid it this year.
Last week, the Group of Seven launched a plan to ban the insurance and financing of shipments of Russian oil and petroleum products, unless they are sold under a specified price cap, and Russia threatened to stop supplying oil and gas to countries participating in the price cap scheme.
In contrast, Saudi Arabia, one of the world’s largest oil producers, has floated the idea that the coalition might consider cutting production, an idea supported by members of the organization such as the Republic of Congo, Sudan and Equatorial Guinea, because they pump more than global demand for oil, and often leads to a reduction in production. OPEC Plus production will raise prices, which is what these countries want to achieve significant gains.
Dubai (Archyde.com)
A document seen by Archyde.com yesterday showed that the joint technical committee of “OPEC Plus” expects a deficit in the oil market in 2023 of 300,000 barrels per day. The committee, which held a meeting yesterday, expected demand to fall short of supplies by 400,000 barrels per day this year, in a downward revision to a previous forecast of 500,000 barrels following taking new assumptions for demand into account.
The document showed that the committee expects the deficit to widen to 1.8 million barrels per day in the fourth quarter of 2023.
Recession fears bring oil prices down to pre-Ukrainian war levels
written by Alexandra Hartman Editor-in-Chief
LONDON (Archyde.com) – Oil prices fell today, as fears escalated of an economic recession that might weaken demand for fuel, as Brent crude touched $93.50 a barrel, the lowest level since February 21, before the Russian military attack on Ukraine led to a price hike. 15.43 GMT, Brent crude futures fell $2.88, or 3 percent, to $93.90 a barrel, while US West Texas Intermediate crude futures fell $2.37, or 2.6 percent, to $88.29 a barrel. Brent crude recorded its lowest level at $93.50 a barrel, the lowest since February 21, while US crude touched its lowest level since February 3 at $87.97. The sale came on the heels of an unexpected buildup in US crude stocks last week. The Energy Information Administration said gasoline stocks also showed a sudden increase as demand slowed. Demand forecasts remained under pressure from mounting fears of economic recessions in the United States and Europe, debt distress in emerging market economies and the tightening COVID-19 policy in China, the world’s largest oil importer. “A pullback from $90 is now a very real possibility, which is very nice considering how tight the market is and how little room there is to mitigate that,” said Craig Erlam, chief market analyst at OANDA in London. “But talk of stagnation is increasing, and if it becomes a reality, it is likely to address some of the imbalances,” he added. The increased pressure came on the heels of concerns that higher interest rates might slow economic activity and curb demand for fuel. The Bank of England raised interest rates on Thursday and warned of the risks of a recession.