CMarkits Yousef Alshammari joined AlArabiya news TV today to discuss what to expect from the OPEC+ first in person meeting in Vienna since March 2020.
OPEC+ is scheduled to meet on the 5th Oct. There has been news of an expected cut of 0.5 to 1.5 mbpd from the alliance. Yet markets are still not significantly reacting due to the fact that OPEC+ is already short of delivering its targeted production by as much as 3.4 mbpd, as of Aug 2022. This means that the actual cuts will far less than the agreed announced figures. For instance, last Sep a cut of 100kbpd was really translated into an actual cut of around 43kbpd of which Saudi Arabia has 23kbpd cut.
While prices have significantly dropped <$90 on fears of recession and over supply, the physical markets continue to be very tight especially as the ban on Russian oil comes into effect end of this year. Nonetheless, the IEA expects the markets to be oversupplied by around 1 mbpd end in Q4 2022. US and OECD oil stocks and refining capacity is shrinking which suggest there is a real disconnect between physical and financial markets.