OPEC+ alliance, led by Saudi Arabia and Russia, has announced a further increase in oil output to 548,000 barrels per day in August, exceeding market expectations.
Analysts had predicted a hike of 411,000 bpd, but the group’s decision to boost production sends a clear message of its shift towards a market share strategy.
“OPEC+ keeps surprising the market — this latest hike was even larger than expected and sends a clear message, for anyone still in doubt: the group is firmly shifting toward a market share strategy,” said Jorge Leon of Rystad Energy.
The decision was based on “a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories,” according to the group’s statement.
Leon added that two key questions now said: “Two big questions now hang over the market: First, once the full 2.2 million barrels per day of voluntary cuts are unwound, will OPEC+ target the next tier of 1.66 million barrels? And second, is there enough demand to absorb it?”
*“Prices Holding Above $60”*
UBS analyst Giovanni Staunovo noted that “effectively Kazakhstan and Iraq still overproducing their higher quotas is a factor supporting the cut unwind decision.”
The OPEC+ group’s decision comes after a recent conflict between Iran and Israel, which briefly sent prices above $80 a barrel amid concerns over a possible closure of the strategic Strait of Hormuz.
SOURCE: nationalaccordnewspaper.com