Two energy expects discuss oil prices as OPEC+ extends production cuts again

Two energy expects discuss oil prices as OPEC+ extends production cuts again

the OPEC plus Cuts uh extending them obviously it seems uh was intended to kind of put a floor under prices do you think it’s actually going to work well it’s a very extensive uh deal Frank there was a lot announced here and uh you covered uh the basic elements of it which is basically keeping Cuts in place until the end of uh December 2025 uh but in terms of how the market reacts I mean the market has been reacting funny to even geopolitical risk that we’ve been seeing here in uh in the region so um any kind of uh reaction has been uh not necessarily to the fundamentals but more relying on sentiment and I think that there’s still concern in the market here about uh the uh growth trajectory for uh this year uh and we we see that in the numbers I mean opec’s very bullish forecast versus uh other agencies which almost have half of that amount so in terms of being bullish for price I don’t think we’re we’re seeing that because that’s not translating all right you don’t think it’s translating Helma coming over to you I just want to point out oil is trading at its lowest price in about a month we did see a spike after some Middle East tensions but since then they just kind of seem to continue decline do you believe these Cuts extending them is going to put some type of floor on prices well I mean what I think is important is we have a road map now in terms of what OPEC production should look like but as aena pointed out I mean we’ve had basically all geopolitical risk come out of this Market everyone has essentially faded the Middle East story and now we have a market that is well supplied we are not in you know deficit at the moment we are going into summer driving season so we have to see what type of draws we start to get now some people read the OPEC sement yesterday particularly the part about the adding barrels back from the voluntary cut as bearish essentially saying that Saudi Arabia is taking a bite out of the lollipop of 1 million barrels that they voluntarily cut the one thing I would say is that they were pretty clear that this is going to dated app pendant so as we get to the end of August if the fundamental picture looks worse than what we have now they would pause that addition so they’re not going to roll those barrels into the market if there is a mark deterioration in the fundamental so they’re giving you a road map for bringing the barrels back but they do have an exit ramp if the situation deteriorates all right so you’re saying it’s a road map I mean I want to come back over to you there was one thing that I think a lot of people or at least I scratched my head about the UAE receiving a revision to actually produce more barrels what was that about uh well the UAE has been building its capacity and let me just kind of rewind and explain why that happened this doesn’t mean that the UAE was favored by the organization uh back in June last year uh the UAE was uh given a baseline of 3.4 and the officials here uh told the Saudis that they are okay having a revision of 3.2 so they were able to agree to a lower Baseline to support the deal as a sign of appreciation to the UAE and knowing that the UAE is building capacity and if you look at the uae’s cuts in terms of percentage it doesn’t match the other countries they needed to keep the UAE at par with all the other states uh by uh by percentage terms so giving that UAE that extra 300,000 uh barrels does uh make sense and make the process a fair one so they were not favored here all right so Helma you called this one a plot twist what is this or does it at Al uh impact just the idea of the road map that you were laying out um Amina gave us the the explanation right there well I think that the twist was that we didn’t get simply a roll over everything through year end I mean we had the extension of the collective cut through December 2025 but now we have this road map on what they’re going to do with the voluntaries I mean there were Market participants essentially saying show me how these barrels are going to come back are they going to be in definitely off the market and so now we have the path for essentially these voluntary cut producers Slow Rolling them into the market now again some Market analysts were very focused on any additional Supply essentially saying this is bearish I would just again caution that it is a slow roll into the market and they can basically pull back if there is a change in the actual Outlook all right hel I’m gonna stick with you uh timing of these cuts it extends to through Q3 leads us right up to the US election is that just coincidence or is there you’re laughing right now is that just coincidence or there’s something else to it it seems like there’s something else to it just by your reaction no I mean I think that’s the the question everyone is asking right now like is this somehow related to the election and the fact that essentially they’re going to be putting barrels on potentially as we go right into the O election what I think though if I were sitting in Washington I would be very happy with this result I mean Simply Having a road map for barrels coming back I think is something that the Biden Administration should be happy with and right now we still have talks ongoing about this us Saudi Grand bargain and so having the Saudi signal a willingness to bring back some barrels I think that buys them Goodwill you know in Washington

Amena Bakr, Senior Research Analyst at Energy Intelligence, and Helima Croft, Head of Global Commodity Strategy at RBC Capital Markets, discuss oil prices following the latest OPEC+ production decision.