ATFX-OPEC Warning: Oil Market May Have Largest Supply Deficit in More Than a Decade!

OPECA report released on Tuesday predicted a further sharp drop in oil supply over the next three months.The supply gap is about 3.30 million barrels per dayAccording to foreign mediaOPECThe analysis of the data, if true, thisThis could be the largest supply deficit since at least 2007.

OPECThe report states that so far this quarter,OPECThe 13 member states produce an average of 27.40 million barrels of oil per day.About 1.80 million barrels less than its projected demand.IFOPECIf the production plan remains unchanged, the supply gap will almost double in the final quarter of this year.OPECIt is estimated that the supply of 30.70 million barrels per day will be required in the fourth quarter to meet consumption.

Affected by the news, WTI crude oil prices broke through $88/barrel, the highest level since November 2022.

At the same time,OPECAdhering to its forecast for strong growth in global oil demand in 2023 and 2024The reason is that there are indications that major economies are performing better than expected, despite headwinds such as high interest rates and high inflation.

OPECThe monthly report shows that world oil demand will increase by 2.44 million barrels per day in 2023 and 2.25 million barrels per day in 2024, both unchanged from the previous month.OPECIn the report, it said, "Continued global economic growth is expected to boost oil demand, especially considering the recovery in tourism, air travel, and stable motoring."Total global oil demand to exceed pre-epidemic levels by 2023”。

OPECThe report also shows that, despite the continued US sanctions against Iran and Saudi Arabia's voluntary production cuts, it has been driven by the recovery of Iranian production.OPECOil production rose in August.

AlthoughOPECOfficials often say their goal is to keep the world oil market in balance, but the latest forecasts suggest they intend to rapidly reduce inventories. The report said,Crude oil inventories in developed economies are already about 114 million barrels below the average between 2015 and 2019。

The tightening of supply to boost oil prices reflects the financial pressure on Saudi Arabia. Bloomberg Economics estimates that,Saudi Arabia may need crude oil prices of nearly $100 a barrel to pay for government spending and Crown Prince Mohammed bin Salman's ambitious projectsSaudi Arabia has spent a lot of money on various investments, including the construction of a future city called Neom and the acquisition of top football players such as Ronaldo by the Saudi sovereign wealth fund.

OPECAnd its allies are scheduled to meet on November 26 to review their output policies for the coming year.

The Saudi-driven supply crunch reflects the kingdom's continued influence over energy markets. But earlier on Tuesday, the International Energy Agency said demand was expected to peak this decade as consumers switched to renewable energy to avoid catastrophic climate change, "we may be witnessing the early days of the end of the fossil fuel era".

As demand hits record highs, Saudi Arabia extends production cuts andOPEC+ Ally Russia's export cuts have pushed benchmark Brent crude above the $90 mark.This could expose the fragile global economy to new inflationary pressuresDiesel prices in Europe have soared, while U.S. airlines have warned passengers to brace for higher costs

It could even become a political headache as US President Joe Biden prepares for his re-election bid next year, with the average US petrol price nearing the sensitive threshold of $4 a gallon. The White House claimed the Saudi move would not complicate its economic efforts.