If the price of Brent crude oil continues to fall below $80 per barrel, OPEC will have to consider cutting production.
Last week, Al Salazar, ·director of Enverus Intelligence Research (EIR), an Enverus subsidiary, said this in an exclusive interview with Rigzone about what might happen at the OPEC+ meeting in December. "Brent crude oil is priced below $80 per barrel and falls far short of the government's target of funding social spending programs," Salazar noted in the interview. By December, crude oil and product inventory levels will confirm whether the current short-term recession fears, i.e. falling demand from China, are justified. "In other words, the expectation of weaker demand now leads to an increase in inventories in the coming months," he added. This would justify the recent drop in Brent oil prices from the $80 median to the $70 low. But we still doubt the durability of this negative demand shift. ”
Asked about the same question this week, Alex Stevens, policy and communications ·manager at the Energy Institute (IER), said, "At the December meeting...... Given the ongoing global conflicts affecting demand and trade routes, such as tensions involving the Houthis in the Red Sea and the Russia-Ukraine war, it is likely that voluntary production cuts will be reassessed. In an exclusive interview with Rigzone, he added: "The outcome of the United States presidential election will also be an influencing factor; Kamala Harris· victory actually benefits OPEC+. While her rhetoric has shifted on some energy issues, Harris's record of policies restricting United States oil and gas production best illustrates the actual policies she will pursue if elected. This would potentially weaken United States' oil and gas production and reduce the competitive threat of United States' influence in the OPEC+ market. ”
In early June, representatives of the Energy Institute stressed to Rigzone that "due to the sharp increase in United States production, unstable demand, and high interest rates, OPEC+ has decided to extend most of the oil production cuts until 2025." "In September, OPEC+ opted to extend the voluntary cuts from October to November, with plans to phase them out starting in December and continuing through 2025," he noted. The decision reflects concerns about overproduction in Kazakhstan and Iraq, which need to be adjusted. ”
"OPEC+'s decision to delay its expected production increase from October to December did not allow the price to break through $80," Will Hares, senior energy ·analyst at Bloomberg's research division, said in a statement to Rigzone on Thursday. "Concerns about demand and strong growth in non-OPEC+ supply suggest that the market will remain well supplied in the second half of the year and that OPEC+ has little room to increase production," he warned. The easing of the divergence of the oil curve further indicates that the real market will be further tightened. Rigzone has asked OPEC to comment separately on the statements of Salazar, Stevens and Hares, and on United States Vice President Kamala · Harris on Stevens' statement. As of press time, OPEC and Harris have not responded to Rigzone.
Earlier this month, a statement posted on OPEC's website highlighted that on September 14, the organization will turn 64 years old. "Over the past 64 years, OPEC has advocated for cooperation and dialogue among all stakeholders to achieve stability ·in the global oil market, address challenges through an inclusive and realistic approach, and ensure that oil continues to support national development and human prosperity," OPEC Secretary-General Haitham Al Ghais said in a statement. The Declaration of Cooperation and the Charter of Cooperation between OPEC and non-OPEC countries are the latest vivid manifestation of these efforts. There is no doubt that OPEC is an advocate of the global oil market and international cooperation, and despite the challenges our industry faces, OPEC remains committed day in and day out to ensure the stability and balance of the oil market for the benefit of all producers and consumers, as well as the global economy. As we celebrate OPEC's unparalleled history of success today, I am confident that with the continued support of OPEC member countries and the entire OPEC family, the Organization will continue to shine for years and decades to come. ”
According to a statement published on the OPEC website on June 2, the 38th OPEC and non-OPEC ministerial meetings will be held on December 1. The next meeting of the Joint Ministerial Monitoring Committee is scheduled for October 2, according to a separate statement published on the organization's website on August 1.