MOSCOW: The price of Brent crude is unlikely to drop to $50 per barrel in the near term due to the OPEC+ decision to increase oil productio...
MOSCOW: The price of Brent crude is unlikely to drop to $50 per barrel in the near term due to the OPEC+ decision to increase oil production by an additional 411,000 barrels per day (bpd) in June. However, a sustained decline to that level may be possible by the end of 2025, Research Director at the Institute for Energy and Finance Alexey Belogoryev said in an interview with TASS.
On May 3, eight OPEC+ countries agreed to raise oil production in June by 411,000 bpd, in line with the initial three-month plan to gradually increase output. A similar decision had been made a month earlier for May. Against this backdrop, the price of Brent crude dipped below $59 per barrel on May 5 but later rebounded above the $60 mark during the day.
Belogoryev pointed out that, according to the Q2 data, the global oil market remains in a slightly undersupplied state. He added that a notable surplus in supply is expected closer to the Q4 of this year.
"Therefore, the assumptions currently being voiced that OPEC+ decisions will cause Brent prices to plunge immediately to $50 per barrel do not appear justified. A sustained decline to such a level is indeed possible, but more likely toward the end of the year," he said.
Should OPEC+ decide to accelerate the pace of production growth, Brent crude could fall into the $40-50 per barrel range, Belogoryev suggested. However, in his view, such an acceleration would indicate a deliberate move by OPEC+ toward a full-scale price war aimed at pushing high-cost non-OPEC+ producers out of the market.
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