Oil majors, OPEC+ face risks as crude supply outstrips demand
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The Organization of the Petroleum Exporting Countries, its allies and major energy companies face a risk of falling crude prices that may lead to output cuts.
After reaching about $90 a barrel in early July, oil declined more than 10% on China’s weakening economy and a forecast of more supply from the Americas that overshadowed demand during the summer driving season and strife in the Middle East, according to Bloomberg News.
The next direction for prices may be determined by the OPEC+ cartel, whose decisions are heavily influenced by Saudi Arabia and Russia. They have worked to enforce production cuts since late 2022 to reduce petroleum stockpiles and to support prices.
OPEC+ must decide in the next few weeks whether to proceed with agreed-upon increases to output in October or postpone the plan amid concerns about demand.
“There are negative expectations of a supply overhang,” Christof Ruehl, senior analyst at Columbia University’s Center on Global Energy Policy, told Bloomberg News.