Oil Spikes As OPEC President Hints At Possible Production Cuts
For the 3rd day in a row, headlines in the energy complex are reiterating the possibility of an OPEC production cut in the face of the decoupling between (tight) physical crude markets and dropping futures prices.
OPEC’s rotating president told The Wall Street Journal that the Saudi energy minister’s proposal to consider a reduction in light of market volatility was “in line with our views and objectives.”
While the OPEC presidency doesn’t have decision-making power, the holder of the position often voices consensus emerging in the organization.
“We think the return of Iranian barrels would be a qualifying event for a collective strategy shift,” among OPEC members, said Helima Croft, the chief commodities strategist at Canadian broker RBC Capital Markets. She added that if an OPEC production cut reduced the oil-price benefits from the Iran agreement, that could erode the political gains for the Biden administration from the controversial deal.
Notably, the idea of a production cut appears to be gaining momentum as Azerbaijan, Libya, Algeria, and Congo all supported the idea in order to reduce volatility and add stability to the oil market.
Meanwhile Iran appears to be positioning itself as anti-Russia:
Iran’s state oil producer will try to win back customers in countries like Greece, Italy, Spain and Turkey in the event sanctions targeting its energy industry and economy are eased, according to people with knowledge of Iran’s strategy
WTI spiked back into the green on the news…
So all we need now is a competing “Iran Nuke Deal Is Imminent… Again” headline to take us back down… but as the OPEC leader said, that will merely trigger the production cuts – hence the ‘stabilizing’ threat.
Who could have seen this coming?
OPEC Sets The Stage For Output Cuts, Sees Oil Market Tipping Into Surplus In Clash With IEA Forecast https://t.co/xlZmsjcp0G
— zerohedge (@zerohedge) August 11, 2022
Tyler Durden
Thu, 08/25/2022 – 07:54
via ZeroHedge News https://ift.tt/zkwxBcb Tyler Durden