Is OPEC shifting its strategy to lower oil prices?

In the past, OPEC+ advocated for production cuts to push oil prices higher. However, in reality, due to various factors, oil prices not only fell but consumption also remained low, leading to significant losses for the countries in the group.

OPEC headquarters are in Austria.

Against this backdrop, according to Reuters, OPEC+ plans to ease production restrictions, aiming to increase output as planned to further lower oil prices and stimulate the global economy , boosting demand for oil. Accordingly, the eight OPEC+ members are expected to increase production by 180,000 barrels per day in October. The group announced its decision to increase production from October amid forecasts of strong consumer demand growth for the remainder of 2024, largely driven by a recovery in China – the world's leading crude oil importer.

But the problem is that there are no real signs of increased demand for oil imports in China, or more broadly in Asia. Meanwhile, there are growing concerns about slowing economic conditions across Europe and North America.

According to OPEC's most recent monthly report, the group still expects China to contribute an additional 700,000 barrels per day to global demand growth. Meanwhile, in July, China's crude oil imports fell to 9.97 million barrels per day, the lowest since September 2022. Estimates for August show China's crude oil imports reaching 11.02 million barrels per day, still lower than the 11.3 million barrels per day in June. From January to July, China's oil imports were approximately 320,000 barrels per day lower than the same period last year.

According to analysts, it is unlikely that China will meet OPEC's expectations, and the rest of the world is also unlikely to see the growth in oil import demand as projected by OPEC.

Meanwhile, for the global economy, lower oil prices would help reduce commodity prices and curb inflation, prompting central banks to further loosen monetary policy. This would help economic growth recover, which in turn would lead to stronger oil demand growth. Lower prices could also help curb some supply, particularly high-cost shale oil in the US.

Source: https://thanhnien.vn/opec-dao-chien-luoc-de-ha-gia-dau-185240903190653194.htm