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Arabian Post
3 days ago
- Business
- Arabian Post
OPEC+ Maintains Output Targets Amid Market Uncertainty
Arabian Post Staff -Dubai OPEC and its allies, collectively known as OPEC+, have reaffirmed their existing oil production targets through 2026, opting to maintain current supply restraints despite ongoing market volatility and internal disagreements over future quotas. During a virtual ministerial meeting on Wednesday, the 22-member alliance confirmed that the group-wide production cuts, initially set in 2022, will remain in place. These cuts include a 2 million barrels per day reduction agreed upon in November 2022, along with additional voluntary cuts totaling 3.85 million bpd by eight key producers—Saudi Arabia, Russia, the United Arab Emirates, Kuwait, Iraq, Algeria, Oman, and Kazakhstan. The voluntary cuts are structured in two layers: a 1.65 million bpd reduction extended through the end of 2026 and a 2.2 million bpd cut scheduled to expire in March 2025. ADVERTISEMENT The alliance's decision to uphold these targets comes amid a backdrop of fluctuating oil prices and concerns over global demand. Brent crude futures have hovered around $65 per barrel, a significant drop from earlier highs, influenced by factors such as increased production from non-OPEC countries and economic uncertainties stemming from global trade tensions. A more contentious discussion is set to take place on Saturday, when the eight core OPEC+ members implementing voluntary cuts will convene to decide on July production levels. These countries have been gradually unwinding the 2.2 million bpd cut since April, with increases of 411,000 bpd implemented in both May and June. The group is expected to consider a similar hike for July, potentially accelerating the rollback of cuts and impacting global oil supply dynamics.
CNBC
3 days ago
- Business
- CNBC
Oil prices pick up as OPEC+ holds oil quotas ahead of July production review
OPEC+ countries on Wednesday agreed to leave their formal output quotas unchanged, with market focus shifting toward potential increases from an eight-member subset of the alliance that had been carrying out separate voluntary production cuts. The OPEC+ coalition has been operating a spate of formal production agreements that bind all members unanimously, along with two output cuts that are only informally tackled by an eight-member subset of the organization. Under formal policy, the entire OPEC+ group is cutting roughly 2 million barrels per day until the end of 2026. On Wednesday, OPEC+ nations said they agreed to "reaffirm the level of overall crude oil production for OPEC and non-OPEC Participating Countries" as agreed during the alliance's December meeting. Separate from formal policy, OPEC+ heavyweight Russia and Saudi Arabia, alongside Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates, are also trimming production by 1.66 million barrels per day until the end of next year, under one opt-in agreement. Until the end of March, these eight members also implemented a second combined 2.2 million-barrel-per day voluntary production decline, which they have begun to gradually unwind in the months since. As of the latest announcements, these nations are set to bring back a combined roughly 1 million barrels per day of their previously cut volumes over April-June and will be assessing further production steps over the weekend. The timing of these hikes has coincided with increasing concern within the OPEC+ group that some members — which have in the past included the likes of Kazakhstan, Iraq and Russia — were not respecting their production quotas. "This group is doing its best, but it's not enough only this group, we need the help of others," UAE Energy Minister Suhail Mohamed al-Mazrouei said Tuesday in a World Utilities Congress panel moderated by CNBC's Dan Murphy. On Wednesday, OPEC+ nations called on the OPEC Secretariat to assess each country's sustainable production capacity to determine their baselines for 2027 — levels used to calculate coalition members' output quotas under OPEC+ agreements. OPEC+ members will next hold a ministerial meeting on Nov. 30. Oil prices were in positive territory shortly after the ending of the OPEC+ meeting. The Ice Brent contract with July expiry was at $65.06 per barrel at 4:30 p.m. London time, up 1.5% from the Tuesday close price. Front-month July Nymex WTI futures were trading at $61.96 per barrel, up 1.76% from the previous day's settlement. Oil demand typically spikes during the summer with the start of the travel season and additional crude burn to produce electricity for air conditioning needs in several Middle Eastern countries. In a note out earlier this week, UBS Strategist Giovanni Staunovo flagged a "closely balanced oil market" in the first quarter of this year, compared with a vast projected supply surplus. "We expect further demand and supply revisions with more incoming data," Staunovo said. "With demand seasonally rising and the eight OPEC+ member states with additional voluntary cuts likely still adding more barrels to the market in July, we look for oil prices to move sideways in a USD 60-70/bbl range over the coming months." The UAE's al-Mazrouei echoed this sentiment, flagging, "We need to be mindful of the demand. Demand is picking up. And demand is going to surprise us, if we're not investing enough."
Yahoo
4 days ago
- Business
- Yahoo
OPEC back in control, but faces balancing act on market share and price stability
-- OPEC has slid back into the driver's seat of global oil markets after the oil cartel's aggressive output hikes put the squeeze on U.S. shale growth. But with the market now bracing for oversupply through mid-2026, the cartel must now balance its appetite for market share without triggering a price rout that could backfire on its own members. 'OPEC+ has shifted to market share over price support. Given the impact of this switch (plus tariffs), oil prices have fallen to the low $60s/bbl, and E&Ps have trimmed capex and D&C plans,' Wells Fargo analysts said in a recen note, underscoring the consequences of OPEC's more aggressive production strategy. With U.S. shale output now more price-sensitive and production forecasts trimmed for 2025 though 2027, OPEC+ has 'slid into the driver's seat,' the analysts said. While U.S shale isn't finished, its growth has plateaued without higher prices, the analysts added, leaving OPEC+ with more leverage to steer the market. The maturity of US shale means breakevens have stabilized around $50–55/bbl, and further cost reductions look unlikely without a major technological breakthrough or a new upcycle. Despite the potential for OPEC+ to slow the pace of output hikes, recent actions suggest otherwise. Wells Fargo has cut its oil price deck, now expecting crude to remain in the low- to mid-$50s per barrel through mid-2026. 'We expect crude oil prices to continue falling and then remain in the low- to mid-$50/bbl range through mid-2026,' the analysts said, adding that only a significant overshoot—where oil falls below $50—would likely force OPEC+ to reconsider. The firm expects a strong price recovery by the second half of 2027, with prices rebounding above $80/bbl, assuming no global recession and steady demand growth. Saudi Arabia remains central to OPEC's power, frequently acting as the 'central bank' of oil by swinging production up or down by as much as 2 million barrels per day--within 12-month periods multiple times since 2000--to stabilize markets. 'Saudi Arabia has walked the talk when it comes to global oil market equilibrium,' the analysts saidm and its commitment to avoiding a price collapse is key to the long-term outlook. OPEC's spare capacity, meanwhile, is sufficient to suppress prices further if needed, with the core group able to add up to 2.2 million barrels per day by simply 'turning on the taps.' The risk of oversupply, however, is real, especially as discipline within OPEC+ ebbs and non-OPEC members produce at capacity. "While the global S/D balance in H1'25 has been tighter than we expected, this is mostly due to OPEC+'s production discipline and restraint," Wells Fargo said. "With that restraint and discipline ebbing, those oversupply risks appear more likely from mid-2025 through mid-2026 at least." Related articles OPEC back in control, but faces balancing act on market share and price stability Gold prices sink as Trump EU tariff delay spurs some risk, yields retreat Oil prices dip slightly in thin holiday trading
India Gazette
23-05-2025
- Business
- India Gazette
Global crude prices to trade with a downward bias in 2025 in range of USD 60 to USD 70 per barrel: Report
New Delhi [India], May 23 (ANI): Global crude oil prices are likely to trade with a downward bias in 2025, according to a recent report by ICICI Bank. The bank has revised its forecast for Brent crude oil, expecting prices to remain in the range of USD 60 per barrel to USD 70 per barrel. There is also a risk that prices could fall even further to USD 55 per barrel. It said, 'Global crude oil prices to continue to trade with a downside bias.... We subsequently further lower our Brent crude oil forecasts that are expected to trade in USD 60/bbl to USD 70/bbl range over 2025.' This is a downward revision from the bank's earlier forecast of USD 65 to USD 80 per barrel. As a result of this new outlook, ICICI Bank now expects the average crude oil price for 2025 to hover around USD 65 per barrel. This is lower than the earlier estimate of USD 72 per barrel. The report stated that several global factors could impact the price movements, including oil production by OPEC, economic stimulus measures from China, and geopolitical developments, especially concerning Iran. While these factors could influence oil prices either way, ICICI Bank believes the overall trend for 2025 will lean towards lower prices. A key reason for this outlook is the expected surplus in oil supply. The bank projects a net supply surplus of 1 million barrels per day (mbpd) throughout 2025. This is because of a combination of subdued global demand and higher production from both OPEC and non-OPEC countries. The trend has already started to show in the oil market, data from March and April 2025 points to increased supply levels as compared with the same period of 2024, when the oil market faced a deficit. The shift to surplus in 2025 is expected to weigh on prices further. The report also highlighted that historically, a net supply surplus has a negative impact on oil prices. As a result, crude oil is expected to continue trading under pressure for the rest of the year unless there is a major geopolitical event that causes a sudden spike in prices. In conclusion, with oil supply rising and demand remaining weak, the crude oil market is entering a phase of transition, and prices are likely to stay on the lower side throughout 2025. (ANI)
India Gazette
21-05-2025
- Business
- India Gazette
India to be key player in framing global energy dynamics: S&P Global Commodity Insights
New Delhi [India] May 21 (ANI): India is expected to play an integral role in global energy dynamics, as the country emerges as a source of energy demand optimism, overpowering the headwinds faced by the global oil markets, S&P Global Commodity Insights said on Wednesday. According to experts at S&P Global Commodity Insights, India is expected to play an increasingly pivotal role in global energy dynamics, with strong demand growth, strategic diversification of supply sources, and a multi-dimensional approach to the energy transition. The Global oil market headwinds involves sluggish demand and mounting supply from both OPEC+ (Organisation of the Petroleum Exporting Countries) and non-OPEC+ countries. 'Global oil prices have lost some the back of a challenging demand environment exacerbated by supply growth from OPEC+ as well as beyond,' said Pulkit Agarwal, Head of India Content (Cross Commodities), S&P Global Commodity Insights. He further points towards the uncertainties surrounding trade, tariffs, and China's demand as key factors. 'For India, oil demand continues to grow helped by favourable demographics and economic growth. India is quickly assuming a prominent place in the global oil demand growth order, while the base is still small to have an oversized implication on the global markets,' he said. India's diversification of oil sources, particularly its continued reliance on Russian oil, is a significant factor in the evolving global energy landscape. According to Gauri Jauhar of S&P Global, India's rapid urbanization and economic ascent, coupled with high pollution levels, create a complex energy challenge. While India aims for cleaner energy, fossil fuels, particularly coal, remain fundamental. She calls this problem of balancing among economic growth, energy transition, and energy security as 'energy trilemma.' Recently, S&P global said in a separate report that India's rapidly growing biofuels industry is very important to the country's energy transformation, balancing economic growth with sustainability. Bioethanol production is expanding, with India nearing its 20 per cent blending target. However, scaling up bio-CNG production and distribution requires a more concerted effort to overcome existing hurdles. However, Pritish Raj, Managing Editor for Asia Thermal Coal, S&P Global Commodity Insights, notes that India's coal demand is projected to rise by around 60% by 2050, with domestic supply expected to meet most of this rise. 'The non-power sector, as the key contributor to import growth, is expected to drive the imported thermal coal demand. India's pace of domestic coal production has been phenomenal; going by the same, our estimate is that India's 1.5 billion mt production target is a reasonable expectation, fuelled by the multi-pronged approach involving private investments, mine auctions, mechanized coal transportation, as well as friendly government policies. Rise in population, rapid economic growth, and higher reach of electricity and disposable income warrant this growth,' he said. According PPAC (Petroleum Planning & Analysis Cell), import dependence of crude oil soared to 87.7 per cent in 2023-24, up from 87.4 per cent. (ANI)
