OPEC+ agreed to a symbolic oil supply cut in October, seeking to stabilize global markets, following a faltering economic backdrop triggered the longest price slump in two years.
And a statement by the group, which Al Arabiya Net received, confirmed that the ministerial meeting of OPEC + confirmed The negative impact of volatility and low liquidity on the oil market At the present time, and the need to support the stability of the market and the efficiency of its dealings, noting that the high volatility and the increasing state of uncertainty require a continuous assessment of market conditions, and the readiness to make an immediate adjustment to production levels in various ways, if the need arises.
The group affirmed that it has the commitment, flexibility and means that enable it to deal with these challenges and guide the market, within the framework of the current mechanisms for declaring cooperation.
OPEC + decided to return the production level, in October 2022, to the levels of August 2022, noting that the decision of the thirty-first ministerial meeting of the group to increase 100,000 barrels per day in September 2022 was for one month only.
Although the cut is modest, it is meant to send a signal that OPEC + is back in “price watch” mode, according to Bill Farren Price, head of oil and gas research at Enverus, told Bloomberg. This step is “sufficient to deter any short selling”.
Brent crude rose 3.2% to $96.03 a barrel at 1:16 pm in London.
Crude oil futures have lost 20% in the past three months, due to fears of a global economic slowdown.
China, the largest oil importer, showed signs of a “worrying” economic slowdown, as consumption fell 9.7 percent in July to a two-year low amid weak business activity and harsh Covid restrictions. Meanwhile, the United States avoided recession and pursued tighter monetary policy.
On the other hand, the analysis of the OPEC + committee, which met last Wednesday, showed that global demand will be higher than supplies in the fourth quarter, which will cause a decrease in stocks by 300,000 barrels per day.
The newly appointed OPEC Secretary-General, Haitham Al-Ghais, said in mid-August that he expected a “bullish” increase in demand from consumers eager to resume normal life following two years of Covid restrictions.
The member states of the Organization of the Petroleum Exporting Countries and their allies, including Russia, met in the framework of what is known as the OPEC + group, at a time when demand is facing adverse conditions, in addition to the possibility of an increase in supplies thanks to the return of Iranian crude to the markets in the event that Tehran concludes an agreement with world powers on its nuclear activities.
According to “Archyde.com”, OPEC + will hold its next meeting on October 5.
Brent crude fell to around $95 a barrel from $120 in June, amid fears of an economic slowdown and recession in the West.
Iran is expected to add 1 million barrels per day to global supplies, equal to 1% of global demand, if sanctions are eased, although prospects for a nuclear deal appeared more murky on Friday.
Evidence from the actual market indicates that supplies are still scarce in light of the decline in production of many OPEC countries below the target rate and the new Western sanctions that threaten Russian exports.
Russia said last week that it would stop supplying countries that support the idea of capping Russian energy supplies in the midst of the military conflict in Ukraine.
It has also reduced once more its shipments of gas to Europe, which is likely to suffer from a new rise in the prices of this important source of energy.
