The oil market is probably looking forward to tomorrow’s decision of the eight OPEC+ countries that have voluntarily cut their production. After media reports indicating that some delegates had already indicated that they would probably decide an additional significant increase in production, the price of oil had fallen. Therefore, the real announcement will probably have only a limited effect. The price of oil would probably only be under greater pressure if oil -producing countries increased their production even more than in previous months or gave indications that there will be equally high production increases in the following months, says Thu Lan Nguyen, head of currency research and raw materials of Commerzbank.
The price of oil is being supported by geopolitical factors
“However, the fact that OPEC+ in its last meetings did not want to commit beforehand speaks against this, probably also to give some members – especially to Kazakhstan – the opportunity to correct their previous overproduction. In our opinion, the breach of these countries to achieve their production objectives is the main reason why the eight countries of the OPEP+, led by Saudita Arabia, production more than originally planned. “
“Meanwhile, the price of oil is being supported by geopolitical factors. The US administration has renewed the license of an American company to produce oil in Venezuela, allowing the company to keep its operations there at a minimum level. At the same time, however, it has banned the company to export oil. This has probably been a disappointment for some market participants after a new extension of the previous production license and export license was discussed.
“In addition, the president of the USA, Trump, recently criticized the president of Russia, Putin, for the recent attacks on Ukraine and threatened with new sanctions, which would probably affect the energy sector there. In the light of these developments, an early relief of energy sanctions, which still seemed possible a few weeks ago, is now hardly conceivable.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
