OPEC Maintains Confidence in Oil Market Despite Price Drop, Blames Speculators

November 14, 2023

The Organization of the Petroleum Exporting Countries (OPEC) has expressed confidence in the oil market’s underlying strength, emphasizing robust fundamentals. Despite recent price declines, OPEC cited healthy global growth trends, strong Chinese imports, minor downside risks to economic growth, and a resilient physical oil market as indicators of market stability.

Speculative Pressure on Oil Prices

OPEC attributed the recent drop in oil prices to financial market speculators. It highlighted that market sentiment has been negatively influenced by speculative activities, leading to a decline in oil prices from their 2023 peak.

Revised Global Oil Demand Forecast

In its monthly report, OPEC slightly raised its forecast for global oil demand growth in 2023, now projecting an increase of 2.46 million barrels per day (bpd), up by 20,000 bpd from the previous forecast. The organization maintained its 2024 demand prediction at 2.25 million bpd.

China’s Role in Demand Recovery

The lifting of pandemic-related restrictions in China has played a significant role in driving oil demand higher in 2023. OPEC’s forecasts for next year’s demand growth remain more optimistic compared to other organizations like the International Energy Agency (IEA).

OPEC’s Production Efforts

OPEC and its allies, collectively known as OPEC+, have been implementing production cuts since late 2022 to provide support to the oil market. However, the report noted that OPEC’s oil production increased in October, despite the agreed-upon supply cuts. This increase was primarily driven by higher production levels in Iran, Angola, and Nigeria.

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