Oil prices could drop even further like the main members of OPEC + OK, OK Production Runge to win market share

The oil ministers of the V8 group – including Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman – have decided to increase the production of 137,000 barrels per day (BPD) compared to next month, they said in a statement.

These countries had already increased production by 2.2 million b / d in recent months.

In their statement published after an online meeting on Sunday, they said that the new entering cycle could be up to 1.65 million b / those ultimately on the market.

“OPEC + has taken the market off guard today – instead of stopping, the group has reported the ambition with a production hike. The barrels can be small, but the message is large,” said Jorge Leon, analyst at Rystad Energy.

“OPEC + favors market share even if it risks sweeter prices,” he said.

Oil prices currently oscillate around $ 65 to 70 a barrel, having dropped 12% this year as a world producers outside OPEC + increases supply and prices limit demand.

OPEC + – which includes the organization of the 12 countries of the oil exporting countries (OPEC) and its allies – had seen in recent years through several production reductions amounting to a total of almost six million b / d.

Analysts, up to a week ago, said that the V8 was likely to maintain their current production levels in October.

By increasing them, even by a relatively modest 137,000 b / d, the V8 rather indicated that OPEC + was arranged in the weather below $ 60 per barrel if it meant returned to the market share.

Leon said: “In reality, the real boost will be much smaller, given the limits of capacity and the compensation mechanism. But perception often counts more than physical barrels.”

However, he said, “this decision raises questions about unity: countries like Russia depend on high prices to finance their war machine, while others are ready to test prices lower than market share”.

Geopolitical factors

The real test for OPEC + will be the last three months of this year, a period when seasonal demand tends to be lower, he said.

Oil specialists closely monitor the Moscow War in Ukraine as well as developments concerning American -Russia relations – geopolitical factors that could have an impact on oil prices.

President Donald Trump, whose efforts to mediate between Russia and Ukraine failed to produce a breakthrough, recently targeted Russian oil and those who buy him.

In August, he imposed higher rates on India as a punishment for his Russian oil purchases.

During a meeting with allies from Ukraine who met Thursday in Paris, Trump told leaders via a conference video that he was frustrated by Russian oil purchases, in particular by Hungary and Slovakia.

Russian export reduction could release market space for OPEC +nations.

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