The Organization of the Petroleum Exporting Countries and its allies (OPEC+) met today amid volatile oil prices and uncertain world demand.
OPEC met on June 3, but ministers made no comment on the policy decision. Today, their allies, including Russia, will also join the discussion.
OPEC+ supplies about 40% of global crude oil. This means their policy decisions can have a big impact on oil prices.
Source of Reuters said OPEC+ recently discussed reducing production, possibly by 1 million barrels a day.
In October 10, OPEC+ announced a reduction in production of 2022 million barrels of oil a day. In April 2, countries suddenly announced a voluntary reduction of another 4 million barrels, starting from May.
Therefore, if through a reduction of 1 million barrels a day, OPEC + will reduce a total of 4,66 million barrels, equivalent to 4,5% of global demand. "We haven't made a decision yet," Iraqi Oil Minister Hayan Abdel-Ghani replied ahead of today's meeting, when asked about the possibility of a reduction of 1 million barrels of oil a day.
Typically, production reductions are applied as soon as the following month. However, ministers can agree to delay the implementation date.
The announcement of the cut in April sent oil prices up $4 a session to $9 a barrel. However, prices then fell rapidly due to concerns about economic growth and global oil demand. Currently, each barrel of Brent costs $87.
Last week, Saudi Arabia's Energy Minister Abdulaziz warned short sellers in the oil market (bet oil prices fall) that they should "watch out". Observers think that this is a signal that OPEC + continues to reduce production.
The West has so far accused OPEC+ of manipulating oil prices and hurting the world economy through high energy prices. They also argue that OPEC is too inclined towards Russia, despite international sanctions imposed on Moscow following the military campaign in Ukraine.
In response, OPEC said that Western money printing policies of the past decade had raised inflation, forcing oil-producing countries to act to protect the value of their main exports. Asian countries such as India and China have bought large amounts of Russian oil recently, while refusing to join Western sanctions on Russia.
The International Energy Agency (IEA) forecasts that global oil demand will increase in the second half of 2023. This could push oil prices higher.
Regarding supply, JPMorgan said that OPEC did not act fast enough to adjust oil supply when US production and Russian exports increased. “Supply is currently too much,” the JPMorgan report said. The bank also thinks that OPEC+ will cut oil by 1 million barrels a day.
Ha Thu (according to Reuters, Bloomberg)
