There is no end to the ups and downs on the oil market: after the price of a barrel of Brent crude climbed well above the $80 mark at the beginning of the week in the wake of geopolitical tensions and the threat of production losses in Libya, it initially fell sharply again. The price of crude oil has now levelled off at $80 per barrel, Commerzbank’s commodity analyst Barbara Lambrecht notes.
OPEC+ countries face a production dilemma
“The decisive factor is obviously the increasing speculation that the eight OPEC+ states will indeed gradually withdraw their voluntary production cuts - as announced at the beginning of June. Until now, the majority of market participants had assumed that the producing countries would take the built-in exit option and only increase their oil production later, referring to the current market conditions. The longer this remains open, the more the oil price threatens to come under pressure.”
“No announcement means more oil in the future. There is no doubt that the decision is not an easy one: the producing countries outside OPEC+ have actually increased their market share at the expense of OPEC+. In addition, there are also some dissenters within OPEC+ who are producing more than agreed. Against this backdrop, heavyweight Saudi Arabia is having to bear more and more of the burden.”
“On the other hand, the attempt to force the competition out of the market by increasing supply has been ‘paid for’ in the past with a massive drop in prices. We therefore continue to assume that the eight volunteers – led by Saudi Arabia – will once again postpone the gradual increase in production in order to avoid a further short-term drop in prices, given the already low prices and fragile demand in China.”
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