OPEC changes strategy to lower oil prices?
Sep 04, 2024
Washington [USA], September 4: Recently, OPEC + has advocated cutting production to push oil prices up. However, in reality, due to many factors, oil prices have not only decreased but consumption has also decreased, causing significant damage to countries in the group.
In such a context, according to Reuters, OPEC+ is expected to ease the exploitation restrictions, aiming to increase production as planned to make oil prices even lower to stimulate the global economy, promoting oil demand to increase again. Accordingly, 8 OPEC+ members are expected to increase production by 180,000 barrels/day in October. The group announced the decision to increase production from October in the context of many forecasts of strong consumer demand growth in the rest of 2024, largely led by the recovery in China - the world's leading crude oil importer .
But the problem is that there is no real sign of increased demand for oil imports in China, or Asia more broadly, while concerns are growing about slowing economies across Europe and North America.
In its most recent monthly report, OPEC still expects China to add 700,000 barrels per day to global demand growth. Meanwhile, in July, China's crude oil imports fell to 9.97 million barrels per day, the lowest since September 2022. China's crude oil imports in August were estimated at 11.02 million barrels per day, still lower than June's 11.3 million barrels per day. From January to July, China's oil imports were about 320,000 barrels per day lower than the same period last year.
According to analysts, it is unlikely that China will meet OPEC's expectations and the rest of the world is also unlikely to grow oil import demand according to OPEC's forecast.
Meanwhile, for the global economy, lower oil prices will help lower commodity prices to reduce inflation, prompting central banks to ease monetary policy further. This will help economic growth recover, which in turn will lead to stronger oil demand growth. Lower prices could also help limit some supply, especially high-cost shale oil in the US.
Source: Thanh Nien Newspaper
