West Texas Intermediate (WTI) oil prices have seen a decline for two consecutive sessions, now hovering around $77.80 per barrel. Despite significant efforts by OPEC+ countries, including notable players like Russia, to stabilize the market through voluntary output cuts, Crude oil prices are experiencing persistent downward pressure. A day earlier!
US WTI Crude (Spot) (XTIUSD) posted an intraday high of $78.50 and intraday low of $77.62. Oil is currently trading at $77.67 (5:18pm Tuesday, 5 March 2024 (GMT+5) Time in Pakistan).
OPEC+’S STRATEGIC CUTS
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have made a concerted decision to extend their voluntary oil output reductions. These cuts amount to a substantial 2.2 million barrels per day (bpd) into the next quarter. Within this framework, Saudi Arabia has declared its commitment to maintain a significant reduction of 1 million barrels per day. Furthermore, Russia has pledged to decrease its oil output and exports by an additional 471,000 bpd. Alongside, Iraq and the United Arab Emirates (UAE) are continuing with their respective output reductions of 220,000 bpd and 163,000 bpd.
GEOPOLITICAL UNDERTONES AND ECONOMIC ENDEAVORS
Amid these oil market maneuvers, geopolitical events and economic ambitions are also influencing the landscape. Discussions facilitated by Egyptian mediators in Cairo, aimed at achieving a ceasefire in Gaza, continue with the involvement of Hamas. Despite these efforts and pressure from Washington for a resolution, Israel has not sent a delegation, pointing to unresolved issues with Hamas.
In another part of the world, Yemen’s Houthi-controlled Maritime Affairs Authority is imposing regulations that require ships to obtain permission before entering Yemeni waters, as stated by Houthi Telecommunications Minister Misfer Al-Numair.
CHINA’S ECONOMIC REVISIONS
On the economic front, China is making significant pledges to rejuvenate its economy following the slowdown induced by the COVID-19 pandemic. The country is set on transforming its economic development model, tackling industrial overcapacity, and has set an ambitious economic growth target for 2024 at around 5%. This target, aligning with analysts’ projections, is expected to enhance fuel consumption by the world’s leading Crude importer, potentially offering support to Crude oil prices amid current challenges.
