Saudi Arabia accelerates mining. Oil is getting cheaper
OPEC+ increases oil production more than expected. Prices of barrels fall, and markets are afraid of hypertension and weakening demand.
After an unexpected decision of the OPEC+ countries to increase oil supply, the prices of raw material on global markets began to fall. A group of pus exporting countries, led by Saudi Arabia, decided that in August it would increase production by 548 thousand. barrels a day. This is more than the market predicted, which assumed an increase of 411 thousand. barrels.
Markets react
The market reaction was immediate. The price of the West Texas Intermediate (WTI) oil barrel with delivery to August fell on the Nymex New York Stock Exchange to the level of $ 66.30, which means a 1.04 percent discount. In turn, Brent oil for September on the ICE Stock Exchange in London got cheaper to $ 68.04 per barrel, i.e. by 0.38 percent.
The OPEC+ decision was made during a short, 10-minute video conference. Although the representatives of the organization hope that the greater supply will be balanced by a seasonal increase in fuel demand, there is no shortage of concern about overparting. – The market remains tight, which can allow you to absorb additional barrels – said Giovanni Staunovo, UBS analyst.
Tension increases
However, there are threats to market balance on the horizon. Rising commercial tensions and economic uncertainty may reduce demand in the coming months. Staunovo points out that in the perspective of 6-12 months the situation may relax, which would conducive to further drops in oil prices.
The International Energy Agency predicts that already in the fourth quarter of 2025 a surplus of raw material will appear in global markets of about 1.5 percent. global consumption. Only in the last two weeks Brent oil has lost 11 %, despite the ongoing tensions between Israel and Iran.
Analysts from Goldman Sachs and JPmorgan Chase expect oil prices to drop to $ 60 for a barrel in 2025. They indicate the weakening of the demand for fuel in China and the impact of duties introduced by the US President Donald Trump, which may negatively affect the global economy and reduce consumption.
