Rising Oil Prices Ahead of OPEC Meeting


Oil prices are on the rise early Tuesday as the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) approaches later this week.

Price Rebound after Delayed Summit

Prices have slightly rebounded after slipping for a few days due to the news of the OPEC summit being postponed. West Texas Intermediate (WTI), the U.S. benchmark, has increased by 0.9% to $75.55 per barrel, while Brent crude, the international standard, has risen by 0.7% to $80.67 per barrel.

Lack of Unity Delays OPEC Meeting

Reports indicate that the delay in the OPEC meeting is attributed to a lack of unity among member countries regarding oil output restrictions. This decision highlights the competing interests of these nations. While they all benefit from higher prices, collectively reducing output can achieve this goal. However, each individual country aims to sell as many barrels as possible to maximize revenue.

Weakening Global Economy Affects Prices

Oil prices are also influenced by signs of a weakening global economy. Deutsche Bank recently stated that there is a strong possibility of a U.S. recession next year. Additionally, China, the world’s second-largest economy, is still experiencing a sluggish recovery since lifting Covid-19 lockdowns a year ago.

Potential Floor for Oil Prices

Even if OPEC chooses not to further restrict output, there is likely a minimum level for oil prices. Analysts suggest that an agreement is still the most probable outcome. The U.S. has expressed its intention to start purchasing oil to replenish its strategic reserves when prices reach approximately $70 per barrel. Other buyers may also enter the market if prices fall slightly further.

Unlikely Collapse in Oil Prices

While the OPEC discussions currently play a role in market dynamics, a complete collapse in oil prices appears highly unlikely.

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