Challenges in Global Oil Market Stability By Quiver Quantitative


© Reuters. OPEC’s Mixed Compliance: Challenges in Global Oil Market Stability

Quiver Quantitative – The OPEC report indicates mixed results in the delivery of new oil production cuts. Kuwait and Algeria have successfully implemented their share, while Iraq’s reduction has fallen significantly short of its target. This disparity in compliance among OPEC members presents challenges in stabilizing global oil markets. The organization has increased its forecast for rival oil supplies, indicating a complex market environment.

Despite uneven adherence to production cuts, OPEC remains optimistic about global oil demand, driven largely by China, expecting an increase of 2.2 million barrels per day. This positive outlook is contrasted by more conservative estimates from Saudi Aramco (TADAWUL:) and major traders, suggesting differing views on market dynamics.

Market Overview:
-Kuwait, Algeria comply, but Iraq lags considerably behind quota.
-Libya outage contributes nearly half of overall production drop.
-OPEC nudges up estimates for rival oil supplies, adding market pressure.

Key Points:
-Uneven compliance challenges OPEC’s ability to balance oil markets.
-Saudi Arabia remains bullish on global demand growth, contrasting other forecasts.
-Implementation of broader OPEC+ cuts and potential extension remain unclear.

Looking Ahead:
March decision on extending production cuts critical for market stability.
Geopolitical factors and rival supply estimates continue to influence oil prices.
Focus on Saudi Arabia’s next move and potential impact on oil industry leaders.

January saw a collective reduction of 350,000 barrels per day from OPEC members, with nearly half resulting from a pipeline disruption in Libya, exempt from the supply agreement. Iraq’s production exceeded its quota, further complicating OPEC’s efforts to balance the market.

The current OPEC+ agreement, including nations like Russia and Kazakhstan, focuses on curbing approximately 2 million barrels per day until the end of the quarter. The decision on whether to extend these cuts will be pivotal for the future of oil markets, with significant impact expected from the coalition’s choices.

This article was originally published on Quiver Quantitative

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