For the North Sea benchmark Brent, there is more risk of a decline in oil prices than a rise. Ronald Smith, senior analyst at BCS World of Investments, told socialbites.ca.
“Unused OPEC+ capacity represents a huge burden on the market, and even if China’s oil demand does not disappoint, the US economy could easily fall into recession,” the expert said.
According to him, the stock market was surprised by the decision of Moscow and Riyadh, which was not the expected reaction. But the market has already taken everything into account in prices. The expert believes that next week Brent oil prices will remain approximately at their current levels. This means about $90 per barrel.
OPEC+ countries have significant unused production capacity and bear the associated costs. Therefore, at an acceptable price level, the first priority of the alliance will be to revive production. Leading analyst of the National Energy Security Fund, Igor Yushkov, in a conversation with socialbites.ca admitted that Saudi Arabia may begin to introduce additional volumes of fuel to the market. As supply increases, prices must fall.
In early September, Saudi Arabia extended an unprecedented unilateral cut in oil production by one million barrels per day, and Russia extended restrictions on fuel exports until the end of December 2023.
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