“Very bad for nothing” is the expression that characterizes the great increases this year production in which it is supposed to have been proceeded by OPEC.
While many were waiting for the oil to be flooded with oil in recent months, eventually that was not the case. The cartel upgraded its production limits by 1,371 million barrels/day from April to June. However, OPEC exports were raised by only 0.303 million barrels, as Analyst Alhaji points out.
After all, the non -influence of OPEC decisions is also reflected on the price of crude oil. Despite fears (or hopes) for a fall of $ 50 or below, Brent today markets over $ 68.5, after a dip in May $ 60.
But what is the true meaning of OPEC’s movement? First of all, the production cuts of previous years were mostly about S. Arabia and not the whole organization. Now, an attempt is made to “house” its operation and to arrange issues such as the exceeding production rate by some members.
At the same time, OPEC wants to have enhanced flexibility in order to respond to demand fluctuations. The current level of prices is deemed sufficient data on fears to slow down the world economy. At the same time, OPEC sees American production peak and wants to be placed for a future where it will start to gradually decline.
Thus, the cartel seeks to exercise more in the long run, which he had lost over the last 15 years due to the shale revolution in the US.
Then there is the issue of sanctions against Russian and Iranian oil. HFI Research estimates that S. Arabia’s exports will eventually increase by 700,000 barrels by the end of this year. In order to compensate, US and Iran exports should be reduced, with demand certainly a critical role.
Thus, there is a careful balance of balance and it remains to be seen where prices will move from now on. If they retreat below one point, then the body is very likely to react, but more tempered and gradually than in the recent past.