(Bloomberg) — With oil costs soaring near three-month lows, forecasters are already predicting that Saudi Arabia may not sit idly by.
The OPEC leader is expected to increase its 1 million barrels in line with the daily cut (imposed over the summer) through next year, according to analysts at UBS Group AG, FGE, Commerzbank AG and Eurasia GroupArray. RBC Capital Markets says this is likely.
An extension “is now very likely, given that the oil market would otherwise threaten to experience oversupply from major sources in the first part of next year,” Commerzbank’s Carsten Fritsch said in a report on Friday.
Subscribe now to read the latest news in your city and across Canada.
Subscribe now to read the latest news in your city and across Canada.
Create an account or log in to continue your experience.
Don’t have an account? Create an account
Saudi Energy Minister Prince Abdulaziz bin Salman insisted this week that global oil demand remains healthy, attributing the fall in the value of Brent crude to $80 a barrel to a “strategy” by speculators. Global inventories are tight and the knowledge of primary consumers such as the United States, China and India looks strong.
However, since the standoff between Israel and Hamas has had no effect on Middle East oil exports, industrialists are turning to worrisome macroeconomic indicators, such as the disappointing industrial figures released in China this week.
Analysts say widespread action across the Saudis, and possibly OPEC leader Russia, limits further price declines. The 23-nation OPEC alliance is scheduled to meet on Nov. 26.
If that wasn’t enough, Helima Croft, commodity strategist at RBC, suggests Riyadh could cut more materials to scare away short sellers. “We see no indication that Saudi Arabia’s energy minister is in a position to throw in the towel,” he wrote. .
In fact, increased sourcing from other manufacturers such as Guyana, Brazil and the United States may simply mean that the kingdom’s strategy faces a very long run: S&P Global Inc. believes the Saudis will be forced to continue discounting until 2025.
Postmedia is committed to maintaining a civilized discussion forum and encourages all readers to share their perspectives on our articles. It can take up to an hour for comments to moderate before appearing on the site. We ask that your feedback be applicable and respectful. We’ve enabled email notifications: you’ll now receive an email if you get a response to your comment, if there’s an update to a comment thread you’re following, or if a user you follow comments. Check out our network rules for more facts and main points on how to adjust your email settings.
To contribute to the conversation, you’ll need to log in. If you haven’t signed up yet, create your account now; it’s FREE.
365 Bloor Street East, Toronto, AT M4W 3L4
© 2023 Windsor Star, a department of Postmedia Network Inc. All rights reserved. Unauthorized distribution or transmission is strictly prohibited.
This uses cookies to personalize your content (including ads) and allows us to analyze our traffic. Learn more about cookies here. By continuing to use our site, you agree to our terms of use and privacy policy.