Bearish sentiments rule oil market as OPEC+ agree to boost oil production
Sopuruchi Onwuka
World’s biggest petroleum supply bloc, OPEC+, has announced decision to increase petroleum liquids output, a move that analysts fear would now mount downward pressure on the value of the commodity in the global market.
The decision is expected to trigger bearish sentiments across global petroleum exchanges, worsen already falling oil prices and maintain a pull on the prices of natural gas.
The Oracle Today reports that the OPEC+ group comprises world’s biggest petroleum producers outside the United States and Brazil. The bloc led by Russia and Saudi Arabia are considered swing producers whose output performance triggers price movements in the global oil market.
OPEC+ confirmed weekend that it aims to add significant 411,000 barrels of oil to its members’ cumulative production for the month of June. The new output addition is suspected to augment for withdrawal of some marginal producers like Angola which left the group in protest against low output quotas.
Member countries from Africa, including Nigeria, have been in constant demand for higher output quotas but they also struggle unsuccessfully to meet assigned numbers when their demands are granted.
New output is also expected to address the diplomatic squeeze on output from Russia which is currently under international trade sanctions by the United States and its military allies over the Ukrainian war.
Russia is thus facing serious economic strains including soaring inflation and extremely high interest rates that further exacerbate the mounting financial costs of the four year old war in Ukraine.
Under the impact of the Western sanctions, Russia has been creating rogue oil market by selling below global benchmarks and helping pull down prices as it continued to supply to eastern buyers as discounted rates.
Besides, the Russian black market supplies appear to be off the official radar of OPEC+ bloc, making it difficult for the group to abide by quotas.
In April, oil prices dipped below $60 per barrel following an earlier unexpected production hike from OPEC+, a move prompted by the threat of new tariffs from U.S. President Donald Trump.
