OPEC Risking Lower Prices with Cut Unwinding: Platts

OPEC+ has succeeded in fine tuning its supply to support prices– keeping prices stable near around $80/b, but the upcoming incrementally supply increased could lead downward pressure, Platt said.

• OPEC+ will start gradually unwinding 2.2m b/d of voluntary cuts from October, while 3.26m b/d remains out of the market until end-2025.
• Prices have already been falling despite the cuts. Platts Dated Brent went from almost $90/b in early to as low as $76/b Aug. 6. They have since rebounded to $80/b.
• “OPEC+ can control supply but cannot do much for demand,” Platts said.
• Platts is seeing 1.6m b/d of growth for 2024, below OPEC’s 2.1m b/d forecast.
• “If they [OPEC+] are wrong [on demand], this release will signal very bearishly to the market, particularly with growth in supply from the Americas.”
• Weaker global demand could delay the start cut unwinding, and OPEC’s incremental strategy allows adjustments for market dynamics.
• Clearer indications of the scale of output rises should appear in September, with OSPs and loading schedules.