A group of oil producers, known as OPEC Plus, said just two weeks after President Biden visited Saudi Arabia’s Crown Prince Mohammed bin Salman in hopes of securing assurances that the group would increase oil production. Decide whether to act to cool oil markets on Wednesday.
In July and August, the group agreed to increase production, bringing production to near pre-pandemic levels. However, global oil supplies are still low and inflation is soaring around the world due to high energy prices.
With economic growth slowing and central banks raising interest rates to combat inflation, concerns over falling energy demand could deter cartels from raising production significantly or at all, analysts say. It is said that there is
Ed Morse, global head of commodities research at Citigroup, said he did not expect any significant production changes from the group’s latest conference. “They might say that prices have peaked and seem to be headed down and are very sensitive to a potential downturn. Demand is an important part of the equation.”
Already, higher oil prices have dampened demand in the US, Europe and Asia, he said.
Oil prices have fallen from their recent peaks, but international benchmark Brent crude is trading at just under $100 a barrel, while US benchmark West Texas Intermediate is trading at about $93 a barrel. traded on and backed by sanctions against Russia. OPEC Plus member. A year ago both were trading around $
Caroline Bain, chief commodities economist at Capital Economics, said she expects the group to announce modest increases in output in the coming months. Increases from Saudi Arabia and the United Arab Emirates will help offset declines in production from Angola, Nigeria and Libya, she said.
The group’s influence over the oil market is limited. Many of the 23 members are already missing their production targets due to lack of investment in production capacity.
Bain said higher output from the group, combined with lower demand from the looming European recession and a slowdown in the U.S., could push Brent prices down to $80 a barrel. .
“Not only is low growth looming, but so is inflation, which means a loss of disposable income and less money to spend on discretionary goods and travel,” she said. “For a family of four, driving to the beach is expensive, so you might not go there often.”
