OPEC+ output decision and oil market outlook

In this interview with Nour Amache from Asharq Business Bloomberg, Dr Carole Nakhle, CEO of Crystol Energy, discusses the OPEC+’s decision at their July meeting and its impact on global oil markets, prices and the economy.

Dr Nakhle argued that the improved oil demand outlook particularly in the second half of 2021 raised expectations of an easing in OPEC+ output. However, downside risks still persist including the recent COVID-19 variants that are spreading, particularly in Asia, causing more travel restrictions and local lockdowns, thereby, potentially limiting growth in demand.

Unlike recent meetings, at the July meeting divergences between key producers within OPEC+ started to resurface. One key difference between Saudi Arabia and Russia is purely technical: Saudi Arabia is the real swing producer within group due to its capability of adjusting its production in a short time span; Russia is not.

Commenting on India, Dr Nakhle said that the country, like many other developing nations, suffer from high oil prices, which can spell trouble to their still fragile economic recovery.

While many people still think of the US solely as a consumer, thanks to the shale revolution, the country has become the world’s largest producer. In this respect the impact of higher oil prices is not clear cut as is the case of other consuming nations.

After a horrible year for the oil industry in general and US producers in particular, the industry is expecting high profitability this year which can support greater investment.