Even if the OPEC+ countries continue their production cutbacks into 2024, there will still be a small supply excess in the global oil market, the head of the International Energy Agency’s (IEA) oil markets and industry division told Reuters on Tuesday.

On the fringes of an Oslo conference, Toril Bosoni stated that stocks are dropping “at a fast rate” and that the oil market is currently experiencing a deficit.

“Global oil stocks are at low levels, which means that you risk increased volatility if there are surprises on either the demand side or the supply side,” she added.

Three OPEC+ sources told Reuters that after prices fell by about 16% since late September, the group is scheduled to discuss whether to implement further cuts to the oil supply when it meets later this month.

From a September 2023 peak of over $98 per barrel, oil prices have fallen to about $82 per barrel for Brent crude. Despite assistance from the OPEC+ cuts and the Middle East war, prices have been pushed by concerns about demand and a potential surplus in the upcoming year.

In a series of measures that began in late 2022, Saudi Arabia, Russia, and other OPEC+ members have already committed to cutting 5.16 million barrels per day (bpd) of oil production, or around 5% of the world’s daily demand.

OPEC+ reached a broad agreement to restrict supplies until 2024 during its most recent policy meeting in June. Saudi Arabia also committed to a voluntary production cut of one million barrels per day for July, which it has now extended to end of 2023.

(Adapted from Reuters.com)

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal