OPEC Plus decision will surge global oil prices - Japan warns

Vienna – OPEC Plus’ (Organisation of the Petroleum Exporting Countries) decision to maintain the cut in fuel production till the end of 2024 will create an imbalance in the market. This could surge fuel rates at the international level, warned a senior Japanese official. Rystad Energy, a leading consultancy company in the fuel sector, has also confirmed this and has warned that crude oil prices will start increasing from next month.

In the recently concluded OPEC Plus meeting, it was decided to maintain the cut in crude oil production till the end of 2024. With this, it has become clear that the reduction of 1.15 million barrels, which started in May, will continue till December 2024. In addition to this cut, Russia announced an additional 0.5 million barrels of fuel cut that will continue through the end of 2024, according to Russian Deputy Prime Minister Alexander Novak.

In addition to the decision in OPEC Plus, Saudi Arabia also voluntarily announced extending the cut in crude oil production temporarily. Accordingly, Saudi Arabia will cut one million barrels in July. The decision was taken as part of preventive measures, said Saudi Arabia’s Fuel Minister, Prince Abdulaziz bin Salman. According to this announcement, the sources informed that Saudi Arabia would produce the same amount of 9 million barrels per day in July.

Due to the decision of OPEC Plus and Saudi, the fuel market may feel short of 3 million barrels per day from July, warned a leading advisory company. Besides, this shortage will lead to an increase in fuel rates, warns Rystad Energy. Japan, one of the world’s leading fuel-importing countries, also expressed concern over the decision of OPEC Plus.

Moreover, the OPEC Plus meeting decided to maintain the already cut production until the end of 2024. Earlier in April, OPEC Plus countries had announced a big cut. Saudi will also cut production by one million barrels from July, creating an imbalance of demand and supply in the global market. Recently, there has not been much transparency in the decisions taken in the fuel sector. Due to this, fuel rates are likely to flare up internationally, warned Hirokazu Matsuno, Cabinet Secretary of Japan.

If OPEC Plus sticks to its decisions in the June meeting, the crude oil prices may go up to $107 per barrel by December 2023, increasing even further, as Goldman Sachs has projected. At the same time, Bank of America has expressed the possibility of fuel rates rising to 90 dollars Crude oil prices in the fuel market increased by 2% on Monday after the announcement of OPEC Plus and Saudi, and the price of Brent Crude has reached $78/barrel. Simultaneously, it has surfaced that the US WTI (West Texas Intermediate) oil has been trading at $75 per barrel.

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