OPEC+ believes falling prices of the petroleum this week’s more than one-year lows is due to financial fears rather than an imbalance between supply and demand, and the market is expected to stabilise, four delegates from the producer group told Reuters.
Crude sank to 15-month lows on Wednesday, with the Brent below $72 a barrel, amid concerns about the contagion of the banking crisis. Crude oil stabilized on Thursday, after Credit Suisse (SIX:CSGN) received a financial lifeline from Swiss regulators.
“It’s a purely financial issue and has nothing to do with oil supply and demand,” said one of the delegates, who asked to remain anonymous. Most likely, OPEC+ will “wait and see” in the hope that the situation “will normalize soon.”
Three other delegates from the OPEC+ producer group, made up of the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, made similar comments.
These comments will dispel any speculation that OPEC+ is concerned about weakening prices and might consider further market support measures. The group’s next political meeting won’t be until June, though a consultative group of key ministers meets on April 3.
One delegate said OPEC’s latest monthly oil market report, released on Tuesday with an improved forecast for Chinese demand, pointed to a solid balance between supply and demand.
“We focus on market fundamentals,” another source said.
Last November, in the face of weakening prices, OPEC+ cut its production target by 2 million barrels per day, the biggest cut since the early days of the COVID-19 pandemic in 2020. The same reduction applies for the whole year 2023.