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Three days of falling oil prices are not a crisis for OPEC, the club of oil producers in decline, but forecasts of a further decline in prices could undermine the strength that remains in an organization which was once able to dictate the direction of the world economy.
A series of reports published in recent days has shed new light on the existential crisis to which the Organization of the Petroleum Exporting Countries has been confronted and which has already been explored here (OPEC is not yet dead, but lost control of the oil market, July 2). .
Glut Oil: Worse to come
The most alarming comments from Opec members, particularly the cartel leader, Saudi Arabia, were released yesterday by the International Energy Agency in its monthly market report, which set out guard against a growing oil surplus that will worsen next year.
"Although the relentless stocks we have seen since early 2018 have stopped, this is temporary," said the IEA.
"Opec + producers (Opec and Russia) will soon see a booming non-opus oil production as the implicit market balance returns to a large surplus, putting pressure on prices." .
"The challenge of managing the market remains a major challenge well before 2020."
Through market management, the IEA means reductions in the production of club members, particularly Saudi Arabia.
Pressure on the Saudi Aramco float
The cuts, however, will not be easy or welcomed by the Saudis who finalize the registration of their national oil champion, Saudi Aramco, on the Tadawul (Saudi stock exchange).
Oil prices around their current level are already testing the finances of most OPEC members who need a price close to $ 70 a barrel just to balance their budgets.
But to go back to $ 70 per barrel today of $ 55, there are two things to do. Either there is a strong increase in demand, which is unlikely to be a significant reduction in the supply of OPEC members already under financial pressure.
This means that the burden of production reduction falls on OPEC members, which is an unfortunate possibility, since most of the cuts have already been reduced to nothing, which could have helped to stabilize the price of oil, but failed to revive hope.
The problem of the overabundance of oil today, and others to come next year, according to the IEA, can be attributed to a number of factors such as the slowdown in global economic growth, the increased production outside OPEC (especially the United States) and soaring economic growth. the production of natural gas in its pipeline and in liquefied form (LNG).
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Three days of falling oil prices are not a crisis for OPEC, the club of oil producers in decline, but forecasts of a further decline in prices could undermine the strength that remains in an organization which was once able to dictate the direction of the world economy.
A series of reports published in recent days has shed new light on the existential crisis to which the Organization of the Petroleum Exporting Countries has been confronted and which has already been explored here (OPEC is not yet dead, but lost control of the oil market, July 2). .
Glut Oil: Worse to come
The most alarming comments from Opec members, particularly the cartel leader, Saudi Arabia, were released yesterday by the International Energy Agency in its monthly market report, which set out guard against a growing oil surplus that will worsen next year.
"Although the relentless stocks we have seen since early 2018 have stopped, this is temporary," said the IEA.
"Opec + producers (Opec and Russia) will soon see a booming non-opus oil production as the implicit market balance returns to a large surplus, putting pressure on prices." .
"The challenge of managing the market remains a major challenge well before 2020."
Through market management, the IEA means reductions in the production of club members, particularly Saudi Arabia.
Pressure on the Saudi Aramco float
The cuts, however, will not be easy or welcomed by the Saudis who finalize the registration of their national oil champion, Saudi Aramco, on the Tadawul (Saudi stock exchange).
Oil prices around their current level are already testing the finances of most OPEC members who need a price close to $ 70 a barrel just to balance their budgets.
But to go back to $ 70 per barrel today of $ 55, there are two things to do. Either there is a strong increase in demand, which is unlikely to be a significant reduction in the supply of OPEC members already under financial pressure.
This means that the burden of production reduction falls on OPEC members, which is an unfortunate possibility, since most of the cuts have already been reduced to nothing, which could have helped to stabilize the price of oil, but failed to revive hope.
The problem of the overabundance of oil today, and others to come next year, according to the IEA, can be attributed to a number of factors such as the slowdown in global economic growth, the increased production outside OPEC (especially the United States) and soaring economic growth. the production of natural gas in its pipeline and in liquefied form (LNG).