Citi Research saw in the note that the ultimate impact on the market of OPEC+’s decision to cut oil production will depend on the duration of the agreement, and expects “major consumers to react to the agreement with dissatisfaction.”
And OPEC+ has agreed to the largest production cut since the 2020 Covid-19 pandemic, despite limited market supply and opposition to cuts from the US and other countries.
The note added: “Our expectation for 2023 without this cut was an oversupply of 2.1 million barrels per day on average due to weak demand and relatively abundant supply, so this real reduction of more than one million barrels per day can cut that surplus in half.”
Citi also mentioned that the prospect of further supply disruptions, a possible adjustment in trade flows due to the imposition of the upcoming cap on Russian oil prices and the European embargo, and a deteriorating macroeconomic environment will continue to cause volatility during the winter and 2023.
Source: El Iktisad
