BAKU, Azerbaijan, September 7. As the global oil market grapples with varying signals on the demand front, attention turns to the robust support for Brent crude oil prices originating from the supply side, with OPEC+ emerging as a pivotal player in shaping the market's trajectory, Trend reports.
The most recent surge in oil prices was ignited by a significant announcement from Saudi Arabia and Russia. They declared their intention to prolong their independent supply cuts, amounting to 1.3 million barrels per day (b/d), until the end of this year. Riyadh has underscored its commitment to evaluating these cuts on a monthly basis and making necessary adjustments in response to evolving market dynamics. BMI, a unit of Fitch Solutions believes that this approach leaves room for further reductions should there be a pronounced slowdown in physical oil demand or a sentiment-induced drop in prices. Consequently, the fourth-quarter market equilibrium appears notably tighter, potentially causing apprehensions among those considering shorting Brent, as they could potentially run afoul of future actions by Saudi Arabia.
The company’s current projections indicate a moderate year-on-year output increase within the OPEC+ group, standing at 367,000 b/d. However, this growth varies significantly among different member countries, with several having limited capacity to boost production even as nominal cuts are phased out. Notably, members of the GCC (Gulf Cooperation Council) are expected to opt for a gradual supply increase, prioritizing market stability. In contrast, Iraq, which is currently operating well below its capacity, has 450,000 b/d of exports halted due to an ongoing dispute with Türkiye. Although these disruptions have aligned Iraq's output with its official OPEC+ quota, its history of compliance with the deal has been less than stellar. Iraq is likely to ramp up production once it resolves the Kurdish export issue, but the timeline for such a resolution remains uncertain, with little progress achieved thus far, says BMI.
In summary, the oil market landscape remains influenced by a delicate balance between demand dynamics and supply factors, with OPEC+ actions continuing to play a central role in guiding the market's direction.
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