Baku, Azerbaijan, July 2
By Leman Zeynalova – Trend:
The recent decision by OPEC to extend the deal for production cuts will help to keep the oil market in supply and demand balance, it will help to mitigate the growth in US crude supply onto the market, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.
He was commenting on the decision made by OPEC during the 176th Meeting of the Conference of OPEC to extend the voluntary production adjustments agreed at the 175th Meeting of the OPEC Conference for an additional period of nine months from 01 July 2019 to 31 March 2020.
Regarding the contradiction of the OPEC decision with the calls of the US to boost the oil production, Welch noted that the US is driven by markets and prices, the OPEC decision will help to support prices, probably keeping Brent above $60/bbl through most of 2019, and therefore US crude production will continue to rise fairly quickly.
Therefore it will also support US gasoline prices, which is not necessarily what the US administration wants, he added.
As for the effectiveness of this decision for keeping global economic growth the expert said it has very little to do with the global economy, in fact higher crude prices are not positive for the global economy, because they make oil more expensive and so reduce demand slightly. “This decision is all about what is best for OPEC and its partners, not the global economy.”
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