Oil price news – OPEC under pressure

We are probably approaching the moment in the oil market where OPEC countries would say "enough" to the falling prices. Oil producers, who have suffered huge losses through pandemics and lockdowns, may once again want to drive up prices so that their budgets don't suffer, from an economic slowdown or recession this time.

The price of a barrel of WTI crude oil had risen by nearly 4 percent as of 13:49 GMT +3 on Monday, with the price hovering at $82.35, while last week's low was set at $76 per barrel. Before the current rebound occurred, however, the price of oil had been falling for four months in a row. Such a series was last seen just before the outbreak. As a result, the price of WTI fell in September to its lowest level since January 2022. Since the peak of the price, which occurred when the war in Ukraine began, oil prices have fallen by more than 40 percent. It seems that OPEC countries cannot afford such a big bump.

What can OPEC do?

News emerged today that the Organization of the Petroleum Exporting Countries is considering cutting output by 500,000 to 1 million barrels per day, or about 1 percent of total world production. The group will meet Wednesday to decide on the move. A person familiar with the matter told the New York Times that the oil market is struggling with oversupply and demand is weakening due to the faltering global economy, BBN reported. If such a decision is made, it would be the second consecutive monthly production cut after the cartel cut output by 100,000 b/d in August due to the deteriorating global economy. According to data published by the St. Louis branch of the Federal Reserve, the price where budget balance is achieved for the United Arab Emirates is $76 in 2022. In contrast, for Saudi Arabia it is $79. Hence, Arab countries may want to ensure that oil prices do not fall below these levels. The cartel will decide on October 5 during a meeting at its headquarters in Vienna.