More oil from OPEC+ from October onwards? – Commerzbank

Despite the ongoing massive production losses in Libya, a media report on Friday that six sources close to OPEC indicated that the eight OPEC+ countries will follow through on their announcement and reduce voluntary cuts from October caused a massive pullback in the oil market, Commerzbank commodity analyst Barbara Lambrecht notes.

OPEC+ to “pay” for the phase-out with significantly lower prices

“The price of Brent crude fell from just over $80 to just under $77 a barrel. On the one hand, the window of opportunity for production increases of around 180,000 barrels per day per month looks favorable given the massive production shortfalls.”

“On the other hand, it is impossible to predict 1) how long the production losses in Libya will last – the UN is already trying to mediate between the conflicting parties; 2) whether Iraq (and Kazakhstan) will actually offset September’s overproduction and cut output; and 3) whether global oil demand will indeed recover as strongly in the second half of the year as the IEA has so far assumed.”

“In its August report, it estimated that global oil demand would be more than 1.5 million barrels per day higher than in the first half of the year. China’s recently reduced imports are a particular cause for skepticism: the poor mood in Chinese industry does not give rise to hopes of a quick recovery. Consequently, there is a risk that OPEC+ will ‘pay’ for its elimination in the form of significantly lower prices.”