Oil prices outlook

In this interview given to DW News, Dr Carole Nakhle, CEO of Crystol Energy, discusses the implications of OPEC+’s decision to cut output by 2 million barrels per day (Mb/d) on oil markets.

Key messages:

1. One has to distinguish between the optics and the facts. Since the majority of OPEC+ members have been producing below their allocated quotas, less than 2 Mb/d will actually be taken from the market. Still, the volume of the cut is sizeable and has put an upward pressure on prices, spelling bad news for consumers around the world.
2. The decision has political implications, particularly given its timing ahead of the mid-term elections in the US, where gasoline prices have negatively affected President Biden’s popularity. It, therefore, won’t be surprising if we hear condemnation from the White House and the NOPEC bill resurfaces.
3. Russia is an important member for the longevity and influence of OPEC+. An increase in oil prices would benefit Russia, just at a time when European sanctions on oil trade become effective.