Two Kuwaiti oil analysts on Monday said that the decision of the OPEC+ group on reducing oil output by two million barrels per day until the end of 2024 aims to enhance the stability and balance of oil markets.
In separate statements for KUNA, both analysts said that this decision shows OPEC+ group’s commitment towards the cooperation deal signed on December 10, 2016, and its keenness on stabilizing the oil markets.
Kuwaiti oil expert Dr. Abdulsamie Behbehani said that this OPEC + decision is expected for two main reasons, namely the increase in production from outside the OPEC + countries, which amounted to about 1.9 million barrels per day, pointing out that this increase came mostly from the United States, Canada, Brazil and Guinea due to the increase in exploration and production.
The second reason is the increase in commercial stocks in some consuming countries by 60 percent, as a result of the previous winter, as it was not as harsh as expected, which reduced the consumption of commercial and even strategic stocks,” he said.
He noted that OPEC+ reduction was expected, as increase of production from outside of the group led to imbalance in the oil market, which was exploited by stockbrokers that led to sharp fluctuations in prices.
“Saudi Arabia’s decision to reduce its production by an additional one million barrels per day next July is in the interest of global markets and supports its stability,” he added.
On the other hand, oil analyst Ahmad Karam said that oil prices still vary at low levels around USD 70 per barrel even after the latest voluntary oil production cut from OPEC+ countries.
He mentioned that these low prices affect directly the oil producing countries that rely on oil income, saying that the voluntary oil reduction did not help, as oil prices have stabilized at their current level.
He added that yesterday’s decision to extend production cuts until the end of 2024 supports the stability of oil prices at the required levels.
He stated that oil prices will remain the same at the present time, until the effect of the additional voluntary reduction by Saudi Arabia begins next month, expecting an increase in oil prices in the coming months of July and August, especially with the travel season and summer.
He explained that current price levels are a result of fears and low economic factors, pointing out that there are expectations of a decrease in economic growth rates for industrial countries, especially China, United States and EU countries.
Source: Kuwait News Agency (KUNA)