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Will OPEC+ save the oil market

15 October 2024

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the internet portal Finance.Mail.ru on the current dynamics of oil prices and the next OPEC+ steps.

"The OPEC+ countries have exhausted the potential to reduce oil production," Alexey Belogoryev notes.

According to him, the technological potential remains, but it is hardly possible to reach a political agreement on new cuts.
"Therefore, we will only talk about curbing production growth: new agreements are indeed possible here, but this will be a field for difficult negotiations," he predicts.

"Therefore, the formal collapse of the agreement should not be expected. But the effectiveness of the OPEC+'s impact on the market will objectively decrease. The reason for this is the reduced maneuverability of OPEC+ due to its unwillingness to further reduce production," Alexey Belogoryev believes.

According to the expert, a short-term increase in prices for Urals, Sokol and other Russian grades is inevitable following an increase in prices for reference oil grades. Moreover, in recent months there has been a reduction in discounts on Russian varieties. But the current rise in global oil prices is unlikely to last.

"The general medium—term trend in the market remains not an increase at all, but a decrease in prices due to the cooling of the growth rate of global demand amid maintaining relatively high growth rates of global oil production," Alexey Belogoryev notes.

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