“OPEC+ is wary of protracted price volatility generated by weak macro sentiment, thin liquidity and renewed China lockdowns, as well as uncertainty over a potential U.S.–Iran deal and efforts to create a Russian oil price cap. Matthew Holland at Energy Aspects said oil market volatility, and geopolitical uncertainty, are worrying Opec: Moving forward, traders should also keep an eye on any developments of a potential price cap that G7 countries are currently trying to apply on Russian crude.”Ĭraig Erlam, senior market analyst at OANDA, warned this morning that cutting production targets would create more volatility and uncertainty, when markets are already uneasy.Īn output cut won’t make them any friends at a time when the world is facing a cost-of-living crisis already and the group has failed to keep up with demand this year. These upsides may persist in the medium-term as well, as cuts from OPEC+ signal that the coalition is more focused on risks associated with a deteriorating demand outlook. Prices for oil futures will likely rally in the short-term as markets will see the news as a positive catalyst for oil prices. So explains Srijan Katyal, Global Head of Strategy & Trading Services at ADSS, who adds": 14.26 Opec+ cuts production: what the experts sayīy cutting production, Opec are trying to halt the recent price decline caused by macro-economic headwinds - including a slowing global economy, the war in Ukraine, and the persistent Covid-19 restrictions in China. BP and Shell were among the biggest climbers on the FTSE 100, while Harbour Energy in the FTSE 250 also gained more than 3%.’’ Her expressed distaste for a further windfall tax on the oil and gas sector will have added to the strength of energy giants today, which had already been boosted by the ratcheting higher of gas prices and the march back upwards of crude prices over supply constraints. She is likely to take up the baton from Boris Johnson in his dedicated support for Ukraine and is likely to clamour for more support in terms of military hardware from European nations. The new Prime Minister’s commitment to spending more on defence by upping the budget to 3% of GDP has boosted the sector, with BAE systems extending gains in early trade following news of her announcement. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says Liz Truss’s victory lifted energy and defence stocks.
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