OPEC+ Increases Production, But Big Question Marks Remain
OPEC+ officially completed a two-year oil production cut by agreeing to a final production increase of 547,000 barrels per day starting in September. This move is part of a strategy to regain global market share and provide a boost to consumer countries, including the United States. However, this decision leaves significant uncertainty for market participants, particularly as 1.66 million barrels per day of additional supply remains tied up with no clarity on when it will be released again.
The market responded calmly. Brent prices fell only slightly by 0.4% to around $69.38 per barrel in Monday morning trading in Asia. OPEC+ delegates stated that all options remain open: from delaying the release of remaining supply, maintaining current levels, to canceling existing increases. A follow-up meeting is scheduled for September 7 to review market conditions and determine the next steps.
However, major challenges remain. Global oil demand is predicted to slow, primarily due to a weakening Chinese economy and rising production from the United States. The International Energy Agency estimates that the global surplus could reach 2 million barrels per day in the fourth quarter of this year. Pressure is also coming from the US, particularly following weak jobs data and President Trump's threat of additional tariffs if Russia doesn't end its war in Ukraine.
Several analysts, including those from Goldman Sachs and JPMorgan, predict that oil prices could fall to nearly $60 per barrel by the end of the year. This is a warning sign for OPEC+ countries, especially Saudi Arabia, which needs higher prices to cover its budget. Therefore, many predict that OPEC+ will adopt a "wait and see" stance, maintaining current production levels while monitoring market conditions.
Geopolitical pressures further complicate the situation. Russia and Saudi Arabia have demonstrated close cooperation, as evidenced by their recent summit in Riyadh. However, pressure from the US, particularly in the form of sanctions on Russian oil, could force OPEC+ to make a difficult decision. Will they release remaining supply for market share, or maintain internal solidarity? The answer may begin to emerge at the next OPEC+ meeting.(ayu)
Source: Newsmaker.id
