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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil Markets On Edge Ahead Of Saudi Arabia’s Next Production Cut Announcement

  • The OPEC+ panel is preparing to meet on Friday, and oil traders will be watching closely for any comments regarding Saudi Arabia’s production.
  • OPEC+ is not expected to alter its current policy, but Saudi Arabia may signal its intention regarding its 1 million bpd unilateral cut.
  • Oil prices were slightly up on Thursday morning, with WTI trading at $79.60 and Brent up to $83.27.

As the OPEC+ panel prepares to meet virtually on Friday, the oil market is more closely watching the next move from Saudi Arabia, OPEC’s top producer and de facto leader.

The Joint Ministerial Monitoring Committee (JMMC) of the OPEC+ group, which regularly discusses the situation on the market and the need for OPEC+ intervention, is meeting in the early afternoon Vienna time on August 4 to take stock of the most recent market developments.

While the panel is not expected to make recommendations to the OPEC+ ministers to change current supply, all eyes will be on Saudi Arabia and whether the Kingdom will decide to extend its unilateral 1 million bpd cut for July and August into September, too.

Most analysts are inclined to believe that Saudi Arabia would extend the cut into September, as it would not be willing to rock the boat just as Brent Crude prices have recently rallied and stabilized above $80 per barrel.

“Having overseen a price recovery and a shift in market sentiment, Riyadh will not want to rock the ship by restoring 1 million barrels a day of supply that markets are now expecting to remain shut in,” Raad Alkadiri, managing director at consultant Eurasia Group, told Bloomberg on Thursday.

The JMMC is unlikely to change the current oil production policy of the alliance at the Friday meeting, several sources in the group told Reuters on Wednesday, as prices rallied to more than a three-month high.

Some analysts expect Saudi Arabia to announce the one-month extension of the 1-million-bpd cut after the JMMC meeting on Friday and ahead of the announcement of the official selling prices (OSPs) for Saudi crude grades loading in September. This announcement of the OSPs from Saudi Aramco is usually issued around the 5th of each month preceding the month of loading and is not accompanied by any comments on the price changes.

Early on Thursday, oil prices were slightly lower, following a sell-off on Wednesday that was prompted by a risk-off sentiment after Fitch downgraded the U.S. Long-Term Ratings to 'AA+' from 'AAA'. Oil prices recovered quickly however and were soon trading flat.

By Tsvetana Paraskova for Oilprice.com

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  • Dewey on August 03 2023 said:
    I would love the Saudi’s to cut another 1 million barrels per day to increase the price of a barrel of oil to let the world know that the Saudi’s are in charge. It’s time that they get the recognition that is well deserved, especially from the United States. The Biden ministration has been extremely dysfunctional to the rank-and-file of the people of United States. It is about time somebody put them in the place, and the Saudi government can do that I believe a barrel of oil should be no less than $120 per barrel, and let it sustain itself for no less than four months, and after that decisions could be made to lower the price at that time, but not before.

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