Finance giants react to biggest Opec+ production cut since 2022

ING Groep NV

The move is enough to dramatically change the balance for next year, pushing the market into a deficit for the whole of 2023, Warren Patterson, Singapore-based head of commodities strategy at ING Groep NV, said in an interview. There is a clear upside to the bank’s Brent forecast of $97 a barrel for next year, he said. However, further releases from US strategic reserves are seen as possible, though they would probably have only limited impact.

Citigroup Inc

While the reduction is large on paper, the effective cut will be much smaller, because the group is already failing to reach their quotas, analysts, including Francesco Martoccia and Ed Morse, said in a note. The move could backfire on Opec+ if it hits economic activity and oil demand further, they added.

RBC Capital Markets

The actual cut will likely be about 1-million barrels a day, with Saudi Arabia accounting for more than half, analysts, including Helima Croft, said in a note. While the White House signalled there could be further releases from the Strategic Petroleum Reserve (SPR), there’s unlikely to be another blockbuster release in the near term, they said.

SPI Asset Management

“The oil complex is busy gauging the complexities of the actual cut, while factoring in the misalignments between the production and quota,” managing partner Stephen Innes said in a note. Brent crude could push back above $100 in the next few quarters, he said.

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