November 27, 2023: An energy official has warned of an impending oil surplus despite ongoing production cuts by the OPEC+ alliance, raising concerns about potential price volatility in the coming months.
The official, speaking anonymously, cited factors such as slowing global economic growth, rising interest rates, and increased supply from non-OPEC+ producers as contributing to the surplus.
“The global oil market is expected to be oversupplied by around 1 million barrels per day (bpd) in the second half of 2023,” the official stated.
This prediction contrasts with OPEC+’s current production strategy, which aims to restore pre-pandemic output levels gradually. However, the official argued that the alliance may need to reconsider its stance in light of the emerging surplus.
“If the surplus persists, OPEC+ may need to consider further production cuts or other measures to rebalance the market,” the official cautioned.
The potential for an oil surplus has had a noticeable impact on crude oil prices, falling by nearly 20% since their September peak. Consumers have welcomed this decline, but it has also raised concerns among oil producers and investors.
“The oil market is in a state of flux, and prices are likely to remain volatile in the near term,” the official concluded. “Producers and investors need to be prepared for uncertainty.”
The official’s prediction underscores the complex dynamics of the global oil market and the challenges policymakers face in managing supply and demand.