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Dr. Youssef Al Shammari, CEO of Sea Markets London, said the decision taken by the Kingdom of Saudi Arabia early last month to reduce voluntary mining, which came into effect in early July this year, is the only factor that could be changed in the contraction policy, expanding it or not.
He pointed out that there is an agreement that is valid until the end of this year with voluntary cuts, in addition to cuts of about two million barrels per day, and these are changes, and there is a new agreement that is valid until the end of this year. end of 2024, which was agreed at the beginning of last month.
He explained that the decision of the Kingdom of Saudi Arabia on a voluntary reduction of one million barrels per day, which came into force at the beginning of July this year, will be a year of change, because the policy of this reduction is for a month, which can be extended, depending on the state of the markets. .Do you accept the extension of the reduction during August and September, and this is the decision of the Sovereign.
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Al Shammari added: “Personally, I think the markets need a decision to extend the voluntary cut for another month because the state of uncertainty is very high and OPEC Plus has been sending signals to the markets and we are not indicative of a change in production policy, but all they are signals for a reduction in speculation and a recovery in the markets.”
He continued: “I believe that the extension of the cut will definitely support the markets, especially if it is passed before the end of the third quarter of this year.”
It was mentioned that oil demand in China rose to 15 million barrels, according to import data, which is higher than the pre-Covid-19 level, as demand was 14 million barrels, indicating an increase in demand and its recovery in China, but the industrial sector recorded a price index in it. Manufacturers were less than 50 points, which indicates the weakness of the sector in April-May, and this suggests that reliable demand from China may not be in line with expectations at the beginning of the year, but there is India and expectations of demand in Asia, which compensates for the economic situation in China and the sectoral crisis. Real estate is leaving, which plays a role in the economic slowdown.
He cited considerations affecting oil prices, including a high level of uncertainty in the global economy, as well as the continued increase in interest rates by the US Federal Reserve and central banks, which is to some extent reflected in oil demand.
He referred to the continuation of Russian production, and its figures are not disclosed, which causes concern among OPEC Plus members.
Al-Shammari said it’s not just about demand, it’s about abundance of supply, as US production stands at 12.2 million bpd, as a result of increased US production efficiency, not more rigs.
