An oil platform off the coast of Angola, in a file image. STEPHEN EISENHAMMER (Portal)
The crude oil cartel is clear: compared to predictions of a sharp slowdown in demand, its data says otherwise. “Oil market fundamentals remain strong despite the exaggerated negative sentiment,” said the latest monthly report from the Organization of the Petroleum Exporting Countries (OPEC), released this Monday. The company is also revising global consumption slightly upward in 2023 and keeping its forecasts for 2024 stable.
The Vienna-based organization, always led by Saudi Arabia, which has for months, together with Russia, applied a sharp cut in its supply to support the price of crude oil, maintains that global demand for this source of dirty energy “continues to show strength and resilience” , with data in this fourth quarter of the year being “better than expected”. In particular, he adds, due to the resilience of Chinese – and Asian more broadly – imports for their refineries and, to a lesser extent, the good sentiment in international air travel, which is increasing jet fuel consumption.
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“The robustness of the physical oil market is reflected in the differences observed in virtually all regions in October and so far in November,” say OPEC technicians. The document comes to light at a crucial time: the barrel of Brent (which is considered the reference in Europe) is well below the price level before the start of the war in the Middle East and in areas with low values since the past. Summer. A decline that the cartel attributes directly to the hands of “speculators”.
The group of exporting countries is basing its forecast of improved demand this year on the performance of the US economy, which is surprisingly resistant to the Federal Reserve’s interest rate hikes to curb inflation. Also on the recent upward revision of growth in China by the International Monetary Fund (IMF). The downside risks, he argues, could come from monetary tightening lasting longer than expected or from “geopolitical developments” that he does not fully define.
The expanded version of the cartel – the so-called OPEC+, which includes the world’s third-largest crude producer and second-largest exporter, Russia – will meet on the 26th to review its production policies. Based on statements from de facto leaders Riyadh and Moscow in recent months, everything suggests that supply cuts will continue in the coming months. This partially contradicts the recent report’s confidence in the strength of demand.
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