Oil prices could fall significantly in the coming months due to increasing contradictions within OPEC+. Konstantin Tserazov, economist and former senior vice president of Otkritie Bank, talked about this in a conversation with socialbites.ca.
According to him, the result of these disputes was Angola’s exit from the cartel. The expert noted that producers have left OPEC before, and the last cartel to leave before Angola in 2019 was Qatar. Tserazov believes that the reasons for leaving today are different.
“Especially large oil producing countries such as Saudi Arabia are making great efforts to reduce the dependence of their economies on oil. These trends are clear; Therefore, many manufacturers are not ready to significantly reduce production to achieve greater benefits in the future,” the analyst explained.
The expert also added that the problems in the Chinese economy and high interest rates in the world pose a risk of global recession, which is extremely negative for oil prices.
“OPEC+ is trying to stabilize the market by limiting production, but the alliance controls less than a third of global production,” Tserazov said. “At the same time, the US and other major producers are increasing production, neutralizing OPEC+ efforts to support prices.”
According to Tserazov, all this is fraught with a further decline in the price of oil. Thus, the price of Brent could drop to $70 per barrel, and the price of Russian oil (taking into account current discounts) to about $60 per barrel.
Previously expert warnedAngola’s departure from OPEC could lead to other participants also leaving.
Previous Analyst named Consequences of Angola’s departure from OPEC for Russia.