Despite the ongoing massive production losses in Libya, a media report on Friday, according to which six sources close to OPEC indicated that the eight OPEC+ countries would stick to their announcement and reduce voluntary cuts from October, caused a major setback in the oil market, notes Barbara Lambrecht, a commodities analyst at Commerzbank.
OPEC+ will ‘pay’ for its phase-out with significantly lower prices
“The price of Brent crude oil fell from just over $80 to just under $77 per barrel. On the one hand, the window of opportunity for production increases of around 180,000 barrels per day per month looks favourable in view of the huge production declines.”
“On the other hand, it is not possible to predict 1) how long the production losses in Libya will last – the UN is already trying to mediate between the warring parties; 2) whether Iraq (and Kazakhstan) will actually make up for the September overproduction and reduce their output; and 3) whether global oil demand will really recover as strongly in the second half of the year as the IEA has so far assumed.”
“In its August report, it projected that global oil demand would be more than 1.5 million barrels per day higher than in the first half of the year. China’s recent subdued imports are a particular cause for scepticism: the gloom in Chinese industry gives no grounds for hope of a quick turnaround. As a result, there is a risk that OPEC+ will ‘pay’ for its phasing out in the form of significantly lower prices.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
