What are the expected “OPEC +” decisions and their impact on oil prices?

2023-06-03 12:41:11

12:50 GMT, 3 June 2023

Global markets are awaiting the results of the “OPEC +” alliance meeting, tomorrow, Sunday, in view of what it may have on oil prices.

Sputnik

The meeting comes amid conflicting expectations regarding what the alliance is heading towards, but most experts point to maintaining the current level of reduction, without changing the level of production, in order to maintain market stability.

Earlier, Saudi Arabia and 8 other countries in “OPEC +” announced a voluntary reduction in production, by a total of 1.66 million barrels per day, in the period from May 2023 until the end of the year.

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The voluntary cut was added to the previous one approved by the coalition, by two million barrels per day, from November 2022 until the end of this year.

Commenting on the expected decisions tomorrow regarding the “OPEC +” meeting, Dr. Muhammad Sorour Al-Sabban, former senior advisor to the Saudi Oil Minister, said that “OPEC” may tend to maintain the current reduction, without adding anything new to the current levels.

compliance with the previous decision

Al-Sabban adds, in his interview with “Sputnik”, that it is expected that “OPEC” will announce compliance with the previous decision regarding the mandatory reduction of up to 2 million barrels per day, and the voluntary reduction of up to one million and 660 thousand barrels per day.

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And the former official continued: “I believe that many factors cast a shadow over the effectiveness of the reduction made by OPEC in the past months, including the fear of not reaching the debt ceiling in the United States, the economic slowdown in the United States, the high inflation rates in Western countries, and the persistence of weakness.” China’s industrial production, although gradually improving.

The impact of political changes

According to Al-Sabban: “The situation has now become more clear, following Washington ended the crisis of raising the debt ceiling and the improvement of the Chinese economy, and the world’s trend towards better levels of economic production, which means that there is no need for a new reduction.”

Al-Sabban believes that “OPEC +” continues to monitor the markets to decide to increase, reduce or maintain the same level as required by the markets.

Al-Sabban indicates that “OPEC +” does not target specific prices, but rather seeks to maintain no shortage of supply in the markets and the absence of a surplus, in the desire for stability in oil markets.

Without changes in the markets

In the same context, the Libyan energy and oil advisor, Dr. Abdel-Jalil Mayouf, agrees on the possibility that OPEC will not go to a new reduction.

Maouf adds, in his interview with “Sputnik”, that “OPEC +” may tend to maintain the current reduction, given that there are no changes in the market that require an increase in the previous reduction.

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And he believes that the current market situation is stable according to the quantities produced, which indicates that maintaining the same quantities produced is the most appropriate now.

He stressed that any decision taken by “OPEC +” in the next meeting is the result of studying the markets, and is not subject to any pressure from the American side, which he has always tried to practice without benefit.

In mid-May, China and OPEC confirmed their commitment to work together to achieve stability in the oil market.

This came during the sixth high-level meeting of the energy dialogue between OPEC and China, in the Chinese capital, Beijing, according to a statement from the organization.

The meeting was co-chaired by the Secretary-General of OPEC, Haitham Al-Ghaith, and the Director of the National Energy Administration of the People’s Republic of China, Zhang Jianhua.

In their meeting, OPEC and China renewed their commitment to work together to achieve the goal of oil market stability, which supports global economic growth and sustainable development.

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