In June this year, eight OPEC+ member countries—Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman—decided to extend the voluntary production cut of 2.2 million barrels per day until the end of September. At that time, the Saudi Energy Minister mentioned that if the market performance was insufficient, OPEC+ might suspend or withdraw its production increase plan.
Previously, consultancy Energy Aspects pointed out that the possibility of OPEC+ delaying its production increase had risen due to weak demand. Meanwhile, the crisis at the Central Bank of Libya had led some OPEC+ countries to hope for a tighter supply situation. However, earlier this week, the Governor of the Central Bank of Libya stated that various factions were close to reaching an agreement, and oil production was expected to resume soon.
On the morning of September 6, international crude oil prices fell again, with WTI crude oil futures dropping below $69 per barrel and Brent crude oil falling to $72 per barrel. Since the beginning of the week, the two benchmark oil prices have respectively dropped by 6.4% and 5.8%.
Prior to OPEC's announcement of extending the production cut decision, Citigroup analyst Anthony Yuen noted in a report that if OPEC+ could not ensure the long-term continuation of the current production cut policy, the market might lose confidence in the organization's ability to maintain oil prices at $70 per barrel.
Additionally, the ADP employment report released before the U.S. stock market opened on Thursday showed that the U.S. added 99,000 new jobs in August, far below the market expectation of 145,000, marking the lowest value since January 2021. This indicates that the high-interest-rate environment is beginning to put pressure on the labor market.
Yesterday, the Federal Reserve’s "Beige Book" report showed that only 3 of the 12 U.S. districts experienced slight economic growth, while the number of districts with flat or declining economic activity increased from 5 in July to 9, further dampening market expectations for fuel demand.
