Why OPEC+ oil supply cuts are failing to boost oil prices

Why OPEC+ oil supply cuts are failing to boost oil prices

Dubai/London: OPEC+, a group comprising the Organization of the Petroleum Exporting Countries and allies including Russia that pumps around 40 per cent of the world’s crude, has been cutting oil output since November in the face of flagging prices. Members Saudi Arabia and Russia, the world’s biggest oil exporters, deepened oil supply cuts on Monday in an effort to send prices higher. Yet the move only briefly lifted the market. Both cuts came in addition to a broader OPEC+ deal to limit supply into 2024 initially introduced in April, and take total output reductions announced to over five million barrels per day (bpd), or about 5 per cent of global oil output. The surprise April announcement deepened production cuts introduced in November, and helped to raise prices by about $9 a barrel to above $87 per barrel in the days that followed. But benchmark crude prices have shed those gains since, with Brent futures on Tuesday trading at just under $76 per barrel. The additional cuts, Eurasia Group analysts argue, “will do little to shift bearish sentiment in a market that is consumed with pessimism about the prospects for oil demand growth in the second half of the year”. Data