Dr Nakhle said that OPEC+ members had an overall consensus on how to proceed with supply hikes which resulted in the rapid meeting. The decision was not surprising as market fundamentals didn’t exhibit drastic changes that justify a deviation from the 0.4 Mb/d production increase per month (between August and December) agreed upon in July.
Unlike gas and other energy markets, oil markets are still shielded from any potential crisis due to weaker than expected demand on oil (as per OPEC’s monthly oil market report). If we have a look in retrospect, we notice that OPEC increases supply to smoothen price levels due to two main reasons. First, from mounting political pressure, mainly by the US, to ease supply and lower prices, something which was clearly seen under the Trump administration. Second, when evidence of demand destruction becomes clear.
Dr Nakhle added that we are currently witnessing a spillover from gas to oil markets but the extent to which this will exhibit an upward pressure on prices is not clear as evidenced in the discrepancies in the estimates.
Commenting on major investment bank statements that oil prices are heading towards the $100/bbl, she said that many moving parts drive the oil price and often forecasters don’t get it right; in fact their misses outweigh their hits!
Watch the full discussion (in Arabic):
“OPEC seeking ways to minimise adverse effects of oil price hikes“, Dr Carole Nakhle, Oct 2021
“Oil demand recovery and gas price spikes“, Christof Rühl, Sep 2021
“Gas crisis hits the European Union“, Dr Carole Nakhle, Sep 2021
“Spare capacity in focus as OPEC+ output hikes coincide with rising oil security risks“, Dr Carole Nakhle, Sep 2021
“OPEC+ Sees 2021 Oil Deficit, 2022 Surplus“, Christof Rühl, Sep 2021