Is OPEC Locked Into Supply Cuts With Oil Below $75

Cat:

Related stories

China Snubs U.S. Crude for Third Month, Even as Ethane Trade Restarts

China has avoided buying U.S. crude oil for three...

Super Eagles Icon Peter Rufai Passes Away at 61

By Abiola Olawale The Nigerian football community has been thrown...

Dakuku Peterside’s Beneath the Surface Book Out in October

By Abiola Olawale Masobe Books, a renowned publisher has announced...

Oil Prices Dip on Confirmation of Inventory Build

Crude oil prices opened weaker today following Wednesday’s release...

Buhari In Stable Condition – Ex-Aide Confirms

By Abiola Olawale Ahmed Bashir, ex-aide to the immediate past...

By Julianne Geiger 

As oil prices hover underneath the $75 for a Brent barrel, OPEC has likely found itself stuck with the extra supply cuts it took on—mainly Saudi Arabia—a hedge fund manager told Bloomberg on Friday.

“It would be too damaging to prices to remove it at this time, given the fragility of sentiment,” hedge fund manager of Black Gold Investors LLC said.

Earlier this month, Saudi Arabia voluntarily agreed to downsize its production targets by another 1 million barrels per day for the month of July—although it could be extended. Oil prices reacted by jumping up, but the effects were not long-lasting. Today, crude oil prices are lower than they were prior to the announced cut, putting OPEC in a tricky position.

In the runup to the OPEC meeting, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman warned traders once again against taking a speculative bet against oil. He made similar threats back in 2020. “I’m going to make sure whoever gambles on this market will be ouching like hell,” he said at the time.

Indeed, OPEC’s cuts they announced back in April hurt short sellers when prices rallied. This time, however, the warning ahead of time likely muted the response to Saudi Arabia’s generous production cut.

OPEC—most importantly Saudi Arabia—is working against disappointing economic data out of China.

Brent prices are just a hair under $75 per barrel today, but recent estimations from the International Monetary Fund suggest that Saudi Arabia’s fiscal breakeven for crude oil is more than $80 per barrel.

Saudi Arabia’s extra cuts go into effect in July, and prices could tick up as supply tightens. After all, the IEA has predicted that crude oil supply will exceed demand by 2 million bpd in the second half of this year.

NB: Julianne Geiger wrote this article for Oilprice.com

The New Diplomat
The New Diplomathttps://newdiplomatng.com/
At The New Diplomat, we stand for ethical journalism, press freedom, accountable Republic, and gender equity. That is why at The New Diplomat, we are committed to speaking truth to power, fostering a robust community of responsible journalism, and using high-quality polls, data, and surveys to engage the public with compelling narratives about political, business, socio-economic, environmental, and situational dynamics in Nigeria, Africa, and globally.

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories

NDN
Latest News
China Snubs U.S. Crude for Third Month, Even as Ethane Trade RestartsSuper Eagles Icon Peter Rufai Passes Away at 61Dakuku Peterside’s Beneath the Surface Book Out in OctoberOil Prices Dip on Confirmation of Inventory BuildBuhari In Stable Condition - Ex-Aide ConfirmsBREAKING: Ex-President Buhari sick, hospitalised abroad2027: Abure, Usman Clash Over Peter Obi’s Rising Profile in ADC CoalitionMTN’s Dabengwa Tier III Cloud Data Centre: A New Era for West African Tech and AIGanduje: Why are they resigning?OPEC Reports a Global Oil Production Decline in 2024IMF Warns FG to Overhaul 2025 Budget to Prevent Economic Meltdown2027: Peter Obi Vows, Says ADC Coalition 'll prioritize Nigerians’ WelfareTragedy! Liverpool Star Diogo Jota Dies in Car Crash in SpainFamily Announces Burial Date of Ex-Kwara Governor, Cornelius AdebayoSex Scandal: Baltasar Engonga, Ex-Equatorial Guinea Anti-Corruption Boss Bags 18 Years
X whatsapp