ISLAMABAD (Kashmir English): A new situation has emerged in the global energy market after OPEC+ decided to increase crude oil production from August, due to which pressure on prices is expected to continue.
Crude oil prices recorded a slight decline in the global market on Monday, the main reason for which is said to be the announcement of a further increase in oil production from August by OPEC+ and the restoration of oil exports by Gulf countries.
Experts say that pressure on crude oil prices remains due to the expectation of an increase in supply in the global market. According to international trade data, the price of Brent crude oil has fallen by 24 cents, or 0.33 percent, to $71.88 per barrel, while on the other hand, US West Texas Intermediate (WTI) crude oil continued to trade at $68.58 per barrel, down 11 cents, or 0.16 percent.
OPEC Plus meeting
OPEC Plus, which includes major oil-producing countries including Russia, agreed to an additional production target of 188,000 barrels per day from August at its meeting on Sunday.
Earlier, a similar production increase was announced for June and July. The main objective of this decision is to stabilize supply in line with demand in the global market and prevent unnecessary fluctuations in prices.
Supply challenges and production targets
According to market experts, although OPEC Plus has decided to increase production, its full effects are unlikely to be seen immediately.
The recent Iran-Israel tensions have limited the supply of several major exporters, including Saudi Arabia, Kuwait and Iraq, due to the disruption of oil tanker movements in the Strait of Hormuz, due to which several countries could not achieve their set production targets.
According to renowned market analyst Tony C. Kimor, the recent decision of OPEC+ is in line with market expectations; however, in the current situation, many member countries are still not able to use their full production capacity, due to which the effects of excess production will gradually emerge.
Gulf countries and Russian exports
On the other hand, Gulf countries have started to restore oil supplies affected during the war situation. During June, the total oil exports of these countries have exceeded 10 million barrels per day after increasing by more than 3 million barrels per day compared to May, but this level is still about 40% lower than pre-war exports.
Meanwhile, crude oil exports from Russia’s western ports have also reached a record level in June. According to sources, Moscow is increasing crude oil exports after the damage caused to Russian refineries due to Ukrainian drone attacks, while experts say that the same trend is likely to continue during July.
Potential impact on local economy
According to economic analysts, if the decline in crude oil prices in the global market continues, oil-importing countries may get relief in their import bills. However, its impact on the prices of petroleum products at the local level will depend on government policy and other economic factors.
