Айжан Алибекова
Ahead of the OPEC+ meeting, as well as against the background of the EIA (US Energy Information Administration) and API (American Petroleum Institute) data on the growth of oil reserves, oil prices tumbled below the $ 100 per barrel mark.
On August 3, after the OPEC+ meeting results were released, Brent crude oil prices have fallen by $ 2 to $ 96 per barrel. The cartel decided to increase the output by only 0.1 million barrels in September. Such a slight increase was explained by OPEC+ limited availability of additional capacity and uncertainty of further prospects on the supply.
The OPEC+ decision did not come as a total surprise to the market, moreover, it will not have a significant impact on prices, as practice shows that cartel members cannot (or do not want to) achieve the planned output targets.
For Saudi Arabia, as the largest oil producer, the current high level of oil prices is the most profitable. According to the results of the second quarter, the Saudi economy grew by 11.8%. This is the strongest growth in more than 10 years. The main trigger for the growth was the increase in oil prices against the background of the conflict between Russia and Ukraine and the increase in production during that period.
The countries with low production costs and the ability to quickly increase volumes to get excess profit in the current period, when demand still outstrips the supply, will benefit the most. However, taking into account several recession risks and forecasts for a noticeable cooling of the global economy, an output increase may face a planned demand reduction in the future, which in turn will have an additional negative impact on the potential price reduction.
