Days after OPEC + greed gradually increased production and by July added about 2 million bpd to global supply, Saudi Energy Minister Prince Abdulaziz bin Salman hinted that the cartel could change course if necessary.
Bloomberg quoted the official as saying that there was nothing in the oil markets that bothered the cartel, but the oil ministers would continue to meet every month and be ready to change the matter if necessary.
This may be necessary at some point, unless the pandemic situation changes drastically for the better. Infections are flaring up in many parts of Europe, the new numbers in Brazil and India are still high, and the rollout of vaccines on a global scale is not as fast as many people would like.
On the other hand, the U.S. economy will soon be shooting at all cylinders, according to most economists and analysts, thanks to the generous federal stimulus program and rapid progress with vaccinations.
However, concerns remain, also in OPEC, as evidenced by Bin Salman’s proposal that the cartel could change course if necessary. When OPEC + agreed to increase production, it did so based on strong expectations that demand would recover globally within a few months.
Even if more oil comes from Libya to the world market and if the US and Iran reach an agreement on the nuclear power agreement, much more Iranian oil will also flow in.
Oil prices have already been curtailed by the uncertainty surrounding the global economy pandemic, and any additional pressure will push them lower, prompting OPEC to act, which it is likely to do.
In some good news for the cartel, the Energy Information Administration revised its forecast for U.S. oil production this year, from 11.15 million bpd last month to 11.04 million bpd, due to the downturn in the Texas Freeze.
By Irina Slave for Oilprice.com
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