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HomeLatest NewsOil falls on fear of recession and Russian production behind OPEC's back

Oil falls on fear of recession and Russian production behind OPEC’s back

Date: February 24, 2024 Time: 00:03:26

Oil prices return to the downward path in international markets after what happened this weekend in Vienna within the meeting of the Organization of Petroleum Exporting Countries (OPEC) and non-cartel partners such as Russia. The distrust of some members about the commitment of the Government of Vladimir Putin when it comes to maintaining its quota has left Saudi Arabia’s unilateral and voluntary cut watered down.

Russia, which is barred from selling oil to the West under European and US economic sanctions, is expanding its oil and gas export deals in Asia with increasing trade with China and India. The European Union is putting Indian exports to Europe under scrutiny due to suspicions that their true origin is Russian.

The Kremlin’s need to maintain a constant flow of income to finance its war in Ukraine is forcing it to exceed the outstanding quotas within OPEC+, which would have led Saudi Arabia to sacrifice 1 million barrels per day of production from July to save the cartel agreement to extend the current quotas until 2024 and consolidate the cuts of the last months.

The ultimate goal is to maintain price tension to sell oil as expensive as possible. According to the new production quotas scheduled for 2024, Saudi Arabia will continue to lead the OPEC+ cartel with 10.4 million barrels per day (mbd), followed by Russia (9.8 million), Iraq (4.4), the United Arab Emirates United States (3.2), Kuwait (2.6), Mexico (1.7), Kazakhstan (1.6), Nigeria (1.4), Angola (1.4) and Algeria (1).

However, that goal is at risk due to the collapse of prices from the highs of last summer, when they were trading almost 100% above current levels. OPEC has announced three production cuts since November, although with little effect on prices. The contract on Brent, the European reference, fell 2.3% this Tuesday, to 74.8 dollars, while the American West Texas (WTI) fell 22%, to 70.6 dollars.

In the background, operators point to the moderation in crude oil consumption as one of the factors that is driving prices down. Stagnant oil demand in the Western world, growing shale (unconventional oil) production, sustained flows from Russia, and the likelihood of oil nations exceeding promised quotas could lead to a more balanced oil market in the long run. term”, pointed out from the Swiss firm Julius Baer in a comment prior to the OPEC meeting.

The entry into a technical recession in Germany despite the fall in energy prices and the risk that the US will continue in the same direction has redirected investors’ attention towards Asia. However, China is also not recording economic indicators that point to growth strong enough to make up for the loss of Western demand.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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