The OPEC + participants overcame their differences and last Sunday agreed, starting in August, to increase oil production by 0.4 million b / d a month until they return the remaining 5.8 million b / d to the market. In addition, starting in May 2022, the base oil production of several OPEC + members will be increased, including Saudi Arabia, the UAE and Russia.
How will this agreement affect oil prices? Will the oil price continue to rise or turn to decline? Anna Zaitseva, an analyst at FG FINAM, answered the question of Fortrader magazine.
– In our opinion, in the near future, the situation with the coronavirus pandemic in the world will have a significant impact on oil prices. Recently, against the background of an increase in morbidity and increased restrictive measures in a number of large countries, global markets have seen a decrease in risk appetite and a strengthening of the US dollar, which, together with the OPEC + decision to increase production since August, puts pressure on oil quotes.
At the same time, reaching an agreement in the framework of OPEC + is a more favorable scenario for the market in comparison with the previously assumed potential scenario of a complete collapse of the deal and an uncontrolled increase in production in the alliance countries. In the medium term, this will contribute to the formation of stable expectations among investors regarding the balance of supply and demand in the oil market and, as a result, reduce the volatility of oil prices.
In our opinion, in the third quarter oil prices may stabilize in the range of $ 67-72 per barrel. The forecast by the end of the year is $ 65-70 per barrel, and on the horizon of 12 months – $ 63-68 per barrel.