Thus, analysts speculate that the price of oil could reach US$100 per barrel, on a day in which the London barrel, the Brent, is listed at $84.84 and registers a rise of US$4.95 (6.11%), after touching the highest level in a month at US$86.44, and crude oil West Texas Intermediate (WTI) operates at $80.53 a barrel, with a rise of US$4.71 (+6.15%), after reaching a maximum since the end of January.
These hikes come amid new and unexpected cuts to OPEC+ production targets, setting the stage for another showdown with the West grappling with higher interest rates, analysts and traders said on Monday.
Analysts say the decision is a sign of unity within OPEC+, despite pressure from Washington on its Gulf allies to weaken ties with Moscow, while undermining Western efforts to limit oil revenues. From Russia. The pledges will bring the total volume of cuts from the group known as OPEC+ to 3.66 million bpd, according to Reuters calculations, equivalent to to 3.7% of world demand.
OPEC+ was expected to hold its production flat this year, having already cut 2 million bpd in November 2022. Saudi Arabia said its voluntary production cut was a precautionary measure intended to support market stability. Russian Deputy Prime Minister Alexander Novak said interference with market dynamics was one of the reasons behind the cuts. The International Energy Agency said the cuts risk exacerbating a tight market and pushing up oil prices amid inflationary pressures.
“The new cuts underpin that the OPEC+ group is intact and that Russia remains an integral and important part of the groupSEB analyst Bjarne Schieldrop said. Rystad Energy believes the cuts will increase tension in the oil market and push prices above $100 a barrel for the rest of the year, which could push Brent as high as $110 this summer UBS also expects Brent to hit $100 in June, while Goldman Sachs raised its December forecast by $5 to $95.
And meanwhile, Goldman said releases of strategic petroleum reserves (SPRs) in the US and France, due to ongoing strikes, as well as Washington’s refusal to replenish its SPRs in 2023, may have prompted the action. from OPEC+.
Rising prices will likely bring more revenue for Moscow to finance its costly war in Ukraine, further disrupting relations between Saudi Arabia and the United States, according to Schieldrop. Although higher oil prices will be bad news for the European Central Bank as it tries to reduce inflation, it is unlikely to fundamentally alter the outlook for monetary policy for now.
Joe Biden criticized the move
The government of President Joe Biden said that the measure announced by the producers was inadvisable and some analysts questioned OPEC+’s justification for the additional production cut.
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The decision means that OPEC+ is determined to act above those possible economic storm clouds that loom on the horizon, said Jorge León, senior vice president at consultancy Rystad Energy.
“These cuts may be signaling that OPEC+ believes there are enough recessionary indicators in the market… (and) they will further tighten the oil market for the rest of the year and could push prices above $100 a barrel.” , he pointed.
Let’s remember that Brent fell last month to $70 a barrelthe lowest level in 15 months, on fears that the global banking crisis and rising interest rates will affect demand, despite lower OPEC production in March due to the interruption of some exports from Iraq .
Source: Ambito
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