In an interview with Al Arabiya, CEO of Qamar Energy Robin Mills discussed how several factors are impacting current oil market fundamentals.
Saudi Energy Minister Prince Abdulaziz bin Salman’s latest comments on the dislocation of the financial “paper” market and the physical “real” oil market, came in light of enhanced volatility in oil prices, which have been swinging wildly in the last couple of weeks between $105 and almost $90.
The minister also floated the possibility and the readiness of OPEC+ to cut oil production if necessary to realign both markets to reflect what he believes is a tighter global oil market.
These comments come at a time where the EU is readying a ban on seaborne Russian crude coming into effect in December and the G7 is considering capping Russian oil prices.
Furthermore, expectations for a new nuclear accord between Iran and the US coming to fruition soon is leading markets to guess how big and how fast will Iranian barrels hit the market.
This is all in addition to growing fears of a global recession due to central banks raising interest rates to combat multi-decade highs in inflation.
All these factors have come together to create ambiguity in the oil markets. Which brings to light the importance of OPEC+ as the one transparent and stabilizing factor out there.
OPEC+ meets on September 5, and while analysts do not expect any change in production levels, work seems to be already on the way to prepare to extend the OPEC+ pact into 2023 and beyond as was revealed by Prince Abdulaziz.