Can OPEC+ Keep Oil Prices Above $90?
OPEC+ is reimagining its role in the oil markets and even though its promise of a tiny cut certainly does not impress outright, one should never underestimate the geopolitical symbolism of its actions. By signaling that the oil group is eager to make swift changes in case geopolitical realities change (ehm, Iran), the lower October production target is also a mirror into the Middle Eastern psyche – as oil started moving closer to the fiscal breakeven levels of Saudi Arabia or Iraq, maintaining crude prices within the $90-100 per barrel bandwidth will remain a top item on the OPEC+ agenda, OilPrice said.
OPEC+ brings end to era of production hikes.OPEC+ agreed to cut collective output by 100,000 b/d, reversing the oil group’s decision from last month, marking the first month in more than two years when they curb production targets amidst unprecedented price volatility. The small cut is actually quite irrelevant considering that OPEC+ is estimated to be some 2.9 million bpd behind collective quotas. Following the OPEC+ meeting today, oil prices jumped by more than 3% in early trade ET, with WTI Crude hitting the $90 per barrel mark, as of 8:33 a.m. ET, and Brent Crude up by 3.5% at $96.64.
Iran talks ‘in danger’ again.The EU’s chief negotiator in the nuclear talks with Iran, Josep Borrell, stated that the negotiations are in danger as Washington and Tehran started diverging on several contested points, most notably guarantees that the US cannot withdraw unilaterally again from the Joint Comprehensive Plan of Action, OilPrice reports.
The JCPOA all but collapsed in 2018 when former US president Donald Trump unilaterally abandoned it and imposed hundreds of sanctions against Iran. His successor Joe Biden entered office pledging to rejoin the deal and lift many sanctions if Iran, which is enriching uranium at close to weapons-grade levels, returned to compliance with the accord. After receiving Iran’s response last week, American officials were downbeat about possible progress in the talks. US state department spokesperson Vedant Patel described it as “not constructive”. Officials said they did not expect any imminent breakthroughs and that the process could stretch past the US midterm elections in November. While many Iranians believe the agreement is necessary to boost the economy, hardline politicians argue that western states need an agreement to enable the return of Iranian crude to the market, The Financial Times said. Mohammad Marandi, an adviser to Iran’s negotiating team, said over the weekend that “Iran won’t accept ambiguities or loopholes in the text. Winter is approaching and the EU is facing a crippling energy crisis”. “Iran will be patient,” he added.