BAKU, Azerbaijan, June 7. OPEC+ will continue to defend an $80 floor while significant demand destruction will kick in if prices exceed $100 (especially given the tight refining market which means $100 passes through to very expensive diesel or gasoline prices), Ben McWilliams, affiliate fellow at Bruegel, a think tank devoted to policy research on economic issues, told Trend.
He believes that OPEC+ and especially Saudi Arabia seem set on a target of $80+.
“This is another substantial cut and signals they are having difficulties keeping crude prices propped up. My expectation for prices is more stability than over the past year, OPEC+ will continue to defend an $80 floor while significant demand destruction will kick in if prices exceed $100 (especially given the tight refining market which means $100 passes through to very expensive diesel or gasoline prices). Market largely seem to have adjusted to a new reality concerning Russian trade which was the big uncertainty,” said the expert.
McWilliams says the fact that OPEC+ continue to cut shows i) that they were perhaps sensible earlier in the year to cut amid criticism from the US, as weaker demand growth did slow prices, and ii) their actions are perhaps not having as strong effect as hoped for in markets.
“The wider global economic outlook of course remains the elephant-in-the-room for all these discussions,” he added.
OPEC+ has decided to adjust the level of overall crude oil production for OPEC and non-OPEC Participating Countries in the Declaration of Cooperation to 40.46 mb/d, starting 1 January 2024 until 31 December 2024.
he decision by OPEC+ to cut oil output is a strategic move made by the organization to stabilize and manage global oil prices.
OPEC+ decisions and their effects can be influenced by various factors, such as geopolitical tensions, technological advancements, renewable energy developments, and unexpected events like natural disasters or economic crises.
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