Oil prices have surged significantly this year
The decision by several OPEC+ producers to voluntarily cut output earlier this month pushed analysts’ oil price forecasts up to $100 a barrel.
Oil prices once again fell below the $80 per barrel mark, with members of the OPEC+ coalition announcing a unilateral cut of 1.65 million barrels per day.
Prices could rise to triple digits. Goldman Sachs revised its Brent forecast by $5 a barrel to $95 a barrel in December 2023.
Analysts now point out widespread financial instability has dampened growth outlook as recessionary fears outweigh supply-demand factors.
Oil markets completely shrugged off the unexpected OPEC+ cuts.
Analysts are betting on China reopening.
Beijing, the world’s biggest importer of crude oil, halted purchases last year amid tough Covid restrictions that have reduced transport fuel requirements. Since late last year, China has been gradually lifting pandemic restrictions, and domestic crude oil demand is returning slower.
But China’s long-awaited reopening may be too little, too late. There are also poor refining margins in Asia and a poor demand cycle.
OPEC+ co-chair Russia’s weight in the group has decreased
Oil prices have been rocked this spring by the collapse of several U.S. and EU lenders, which has kept volatility-averse investors away from historically riskier assets such as commodities.
These sentiment-driven fears will likely be temporary and out of touch with supply-demand realities.
With markets nearing $80 a barrel, Croft questioned what resources are left in OPEC+’s arsenal.
The latest cuts already mean a tight supply-demand balance that could weigh on households, the IEA warned in its latest oil market report.
The latest cuts are pushing up both crude oil and product prices.