While non-OPEC+ producers are ramping up production at the expense of OPEC+, which seeks to defend oil prices, oil companies are still relying on OPEC+ to protect their investments in crude oil. OPEC+ serves as a safeguard for these companies in the oil market. Perhaps for the first time, we are witnessing war-related tensions between Israel and Iran, and the potential loss of some Iranian oil volumes.

Despite this, oil prices remain firm but still in the low $70s, which is a disappointing figure for oil traders. With approximately 17 million barrels of crude oil passing from the Arabian Gulf region to the world, prices have stubbornly r e m a i n e d around $73 per barrel. The current figures are disappointing, but ample supply continues to dominate the oil market. OPEC+ is strictly adhering to its quotas, and there is very little that the organization can do to improve prices without a shift in demand. Unfortunately, the anticipated demand from China has not materialized, leaving other oil producers to wait and suffer.

At this level, OPEC+ has limited options for pushing prices upward. It must simply wait for a surge in demand to occur. Without this, all producers must be patient and hope for an unexpected miracle, which seems unlikely to happen this year and possibly next as well. Oil-producing countries are grappling with recurring budget deficits and cash shortages. These nations must seek alternatives, either by cutting expenses or resorting to borrowing.

One year ago, oil markets did not anticipate such low prices due to weak demand. Perhaps, lower oil prices could stimulate global economic activity, potentially leading to increased demand in the remaining months of the year. If that doesn’t happen, January is just around the corner. For now, let us hope for oil prices to rise above $75 and look for higher demand.

By Kamel Al-Harami
Independent Oil Analyst
Email: [email protected]