The Saudi Arabia-led coalition is likely to keep production stable in September rather than increase it, according to a Bloomberg survey of traders and analysts. Many delegates from the group members in particular expected the same.
By the end of this month, the Organization of the Petroleum Exporting Countries and its allies will have formally completed restoring supplies they had halted during the pandemic.
Additional steps
While visiting Saudi Arabia last month, Biden said he expected the group’s leader to take “additional steps” to increase production. US officials have since indicated their confidence that Riyadh will do the trick.
However, the kingdom has been cautious regarding its plans, with Foreign Minister Adel al-Jubeir acknowledging that it will respond only in the event of a supply shortage. The coalition of 23 countries will meet online on Wednesday.
Crude oil prices are still hovering near $100 a barrel, exacerbating the inflationary sting for consumers and putting the global economy at risk. However, OPEC+ delegates said they are concerned regarding the demand threat from a possible recession in the United States, and the continuing impact of the COVID-19 shutdowns in China.
Keeping production stable at August levels might avert a potential break with Russia, an important member of the alliance, which faces sanctions on its oil exports over its invasion of Ukraine.
“(OPEC) is unable or unwilling to transform as much as consuming countries would like,” said Tamas Varga, an analyst at PVM Oil Associates in London.
mixed opinions
Opinions on the outcome of the OPEC+ meeting were evenly divided. Among the 23 respondents to the survey; Thirteen people expected the group to maintain the production level unchanged, while the rest expected increases ranging from 200,000 barrels per day to up to one million barrels per day.
“While President Biden’s visit to Saudi Arabia did not produce immediate oil results, we believe the kingdom will respond by continuing to gradually increase production,” said Helima Croft, chief strategist at RBC Capital Markets. Oil to market is undoubtedly a huge disappointment in Washington.”
OPEC+ has surprised observers on occasions over the past few years, either by increasing production when the status quo was expected to continue, or vice versa. Saudi Energy Minister Prince Abdulaziz bin Salman said he enjoys deceiving speculators.
The kingdom has already shown some goodwill to consumers by accelerating the previously slashed production recovery rate in July and August. A separate Bloomberg poll showed that the group’s members from the Arab Gulf states made good on their pledge last month.
An analysis from an OPEC+ committee that met on Tuesday showed that the group’s expectations had grown at a less pessimistic pace, as its estimate of the global oil market surplus this year fell by 200,000 barrels per day to 800,000 barrels per day.