The Organization of the Petroleum Exporting Countries and its allies, including Russia (OPEC+) gathered in Vienna, Austria, to decide whether to extend the current production cuts or take further action to raise prices. oil.
According to Reuters, OPEC+ is discussing deeper oil production cuts, possibly up to 1 million barrels per day, after oil prices fell to $70 per barrel and market analysts spoke of an oversupply. new.
Market stabilization
Most analysts expect OPEC+ to keep oil production levels unchanged, but the group has surprised the market on several occasions over the years, including with a shocking cut announced two months ago.
The sources said the cuts could be as much as 1 million bpd. If approved, the total production cuts will increase to 4,66 million bpd (about 4,5% of global demand), including a 2 million bpd cut from November and a cut voluntary 11 million bpd from May until the end of 1,6.
OPEC+ currently supplies about 40% of the world's crude oil, so its policy decisions can have a big impact on oil prices.
OPEC+ unexpectedly announced an oil production cut of about 1,16 million bpd from May until the end of 5, bringing the total oil output cut from November 2023 to 11 million bpd. Photo: Tehran Times
Western nations have accused OPEC of manipulating oil prices and weakening the global economy through high energy costs.
Meanwhile, OPEC officials and insiders say Western money printing over the past decade has fueled inflation and forced oil-producing nations to act to maintain the value of oil. mine.
“The main objective of OPEC and its allies is to maintain the stability of the oil market and avoid any volatility,” said Hayyan Abdul Ghani, oil minister and deputy prime minister in charge of energy affairs. of Iraq said on June 2.
"We will not hesitate to take any decision that brings more balance and stability," Ghani said.
OPEC ministers will meet on June 3, followed by an OPEC+ conference on June 6.
Budget balance
The production cuts announced in April are only a month old and will last until the end of the year, making it difficult to gauge their impact at the moment, analysts at JPMorgan said.
According to the bank, the cuts will only appear in export data for the second week of May, so it may take a few more weeks to see how the OPEC+ decision is implemented and how effective they will be. how.
The production cut announcement helped push oil prices above $87 a barrel, but that number quickly dropped due to concerns about global demand and economic growth.
The international benchmark Brent oil price has fallen to a low of $70 in recent days. Analysts say the price is not enough for Saudi Arabia and other Middle Eastern producers to balance their budgets this year.
Russian Deputy Prime Minister Alexander Novak said that the current oil price at $75-76 reflects the market's assessment of the global economic situation. Photo: Reuters
In May, the International Monetary Fund (IMF) said that Saudi Arabia needs oil prices at 5 USD / barrel to balance its budget in 80,90.
Last week, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman advised oil short sellers to "watch out". According to market observers, this could be a warning of possible supply cuts.
However, Russian Deputy Prime Minister Alexander Novak said he did not expect any new steps from OPEC+ in Vienna, because the organization had just made a decision regarding voluntary oil production cuts a few months before.
According to Novak, the price of Brent crude oil could surpass $80 per barrel by the end of this year, due to increased demand in the summer and OPEC+ production cuts..
Nguyen Tuyet (According to Bloomberg, Reuters, Oil Price)
