Oil prices could reach 0 a barrel in 2024 if OPEC+ members fulfil pledges for voluntary cuts


Processing towers stand on the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.

Andrey Rudakov | Bloomberg | Getty Images

Oil prices are anticipated to rise in the brand new yr after some OPEC+ oil producers voluntarily pledged to cut output.

The oil cartel on Thursday released a statement that didn’t formally endorse manufacturing cuts, however particular person nations introduced voluntary reductions totaling 2.2 million barrels per day for the primary quarter of 2024.

Leading the cuts is OPEC kingpin and largest member Saudi Arabia. Riyadh agreed to increase its voluntary manufacturing minimize of 1 million barrels per day — which has been in place since July — till the top of the primary quarter of 2024. Russia said it will cut supply by 300,000 barrels per day of crude and 200,000 barrels per day of petroleum merchandise over the identical interval.

Iraq is chopping by 223,000 bpd, the United Arab Emirates by 163,000 bpd, Kuwait by 135,000 bpd, Kazakhstan by 82,000 bpd, Algeria by 51,000 bpd and Oman by 42,000 bpd.

“Compliance is vital. It cannot simply be Saudi Arabia. We should have compliance from the opposite OPEC nations,” Bill Perkins, CEO and head dealer of Skylar Capital Management, instructed CNBC. “When these different nations say they will minimize, the market does not belief it as a lot,” he added.

Stock Chart IconStock chart icon

Oil prices year-to-date

The manner the manufacturing cuts have been introduced additionally fueled merchants’ confusion and skepticism. In earlier bulletins, the OPEC+ press launch contained all related data. But on Thursday, particular person member states issued separate statements on their voluntary cuts.

If members do fulfil their pledged cuts, crude prices are set to climb.

When the cuts expire on the finish of the primary quarter, these eliminated barrels will solely return progressively, “which ought to assist preserve the oil market in deficit in 1H24,” UBS strategist Giovanni Staunovo wrote in a word following the choice, including that he expects prices to rise in the undersupplied oil market.

“If the compliance price of the group improves from right here, much more barrels could get eliminated,” Staunovo added.

Similarly, Goldman Sachs forecasts increased prices, adopting a wait-and-see method on OPEC+ members adhering to the proposed cuts.

“We estimate a modest mechanical enhance from the additional minimize to Brent Dec24 prices of round $4/bbl relative our prior OPEC+ assumptions,” the funding financial institution mentioned in a word, including that it expects the group “can preserve Brent oil prices in the $80-$100 vary in 2024.”

Global benchmark Brent crude futures traded 0.25% decrease at $80.66 a barrel Friday, whereas the U.S. West Texas Intermediate crude futures slipped 0.04% to $75.93 per barrel.

—CNBC’s Ruxandra Iordache contributed to this report.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *