ATFXSaudi Arabia plans to reduce oil production,OPECMember countries have responded one after another

This week, the Saudi Minister of Energy stated that,OPEC+We will soon begin to develop a new agreement and be prepared to reduce production in different forms at any time. Yesterday, several countries including Iraq, Kuwait, Equatorial Guinea, and VenezuelaOPECMember countries have issued a statement expressing support for Saudi Arabia's production reduction plan. Prior to this,OPECThe signal sent to the market has always been a moderate increase in production.8At the beginning of the month31sessionOPEC+At the ministerial meeting, it was mentioned that, considering the latest fundamentals of the oil market, we will9Upward adjustment of monthly production level1010000 barrels/Day. In less than a month, there has been a significant change in attitude, which is related to the fluctuations in international oil prices. LatestWTIoffer95.31dollar/The barrel is still in the historical high range.OEPCThere are two reasons for the reduction in production at this time, one of which is obviously a desire tocrude oilMaintain prices at100Above the US dollar in order to continue earning excess profits; Secondly, global economic growth expectations have been lowered, there is a risk of a downturn in demand, and the supply side should not continue to increase production.

causeWTIPrice from3Monthly highest price130The US dollar has fallen to the present day100The reason for the level of the US dollar index is the "economic recession trend" triggered by the collective aggressive interest rate hikes of central banks in developed economies. The central bank believes that raising interest rates can prevent inflation from continuing to rise, and this is indeed the case in the United States7monthCPIfrom9.1%Lower to8.5%. However, central banks such as the Federal Reserve and the Bank of England are following an overly rapid pace of interest rate hikes, which raises market concerns: before high inflation ends,GDPThe growth rate and unemployment rate data have been negatively affected. This recession expectation has not yet been supported by economic data, but its impact on crude oil prices is already very evident.

stay8Of the monthOPECIn the monthly report, major economies were downgraded in their2022Expected economic growth for the year. For example, in the United StatesGDPThe growth rate has been reduced to1.8%The eurozone has been downgraded to3.2%China downgrades to4.5%The economic growth expectations of Japan, India, and Russia remain unchanged. Global2022and2023The annual economic growth rate has also been lowered to3.1%. Therefore,OPECInternally, there has been some expectation of a decrease in crude oil demand, and in order to stabilize market confidence, a production reduction signal was released to the market in advance.

The Russia-Ukraine conflict has played a weaker and weaker role in boosting international oil prices. The Russia-Ukraine conflict has lasted for half a year, and the risk aversion has been overdrawn. There is little money left to be bullish on crude oil prices based on the event. The European Union will12After the month, Russian oil will be completely discontinued, and there may be significant fluctuations in crude oil prices. Before that, if the Russia-Ukraine conflict did not extend to other countries (such as Sweden, Finland, Norway, etc.), the "oil shortage" would not happen.

The Iran nuclear agreement is currently under negotiation. Iranian Foreign Ministry spokesperson Kanani said“8month24On the day, Iran received a response from the United States through the European Union. Iran has begun to carefully review this response and will provide feedback to the EU coordinator after thorough research US State Department spokesperson Price said, "We are one step closer to reaching an agreement." Once the Iran nuclear agreement is re reached, Iran's oil will flow smoothly into the international market, and the supply-demand imbalance will further intensify.

ATFXThe analyst team's concise view: The global economic growth rate has been generally lowered,WTIPrice from130The above drops to100following,OPECReleasing the production reduction signal is logical.

*Risk Tips and Disclaimers*
There are risks in the market and investment should be cautious. The above contents only represent the views of analysts and do not constitute any operational recommendations.
2022-08-25