The OPEC oil production increase meeting will be held today. Market expectations are strong for the increase in production in July and August to reach 648,000 barrels. 648,000 barrels compared with 43.3 million barrels in June.

The OPEC oil production increase meeting will be held today. There is strong market expectation for the increase in production in July and August to reach 648,000 barrels. 648,000 barrels increased by 50% compared with 432,000 barrels in June. OPEC chose to start increasing production in July, which can be seen as It was a meeting gift for the US President Saudi Arabia . On Wednesday, Brent oil prices rebounded to 113 US dollars per barrel. Before the production increase meeting, the oil price rebounded to above 110 US dollars. The market's impact on the oil price of this production increase has already been reflected in the price.

Then the question is, why are funds not optimistic about the effect of increasing production in July on suppressing oil prices? In the final analysis, it should be two factors. OPEC can increase production but the actual production capacity is not much, and the second is that demand will increase even more in summer.

The low oil prices caused by the epidemic in 2020 have brought the world's major oil-producing countries' investment in petrochemical energy to a freezing point in the past decade, and the increase in petrochemical energy production relies heavily on new investment. There are only three countries in the world that can increase daily production to more than 12 million barrels. One is Saudi Arabia, one is the United States, and one is Russia. Among these three countries, there is little room for continued upward growth after increasing to 12 million barrels. The United States’ daily output It has exceeded 12 million barrels, and the ability to increase production is extremely limited. Even if Russia is determined to increase production, it will have concerns. After all, Russia's main export direction was Europe in the past, and the transfer to Asia involves pipelines and transportation, which cannot be completed in the short term. Now only Saudi Arabia is left. Saudi Arabia's current daily output is 10.5 million barrels, which is still 1.5 million barrels away from 12 million barrels. This 1.5 million barrels has indeed limited pressure on international oil prices.

Have high oil prices become a dead end in 2022? Using Goldman Sachs , the way to deal with high oil prices is high oil prices. Only if the oil price reaches a certain level, such as 140, it will damage demand, and the oil price will naturally come down. Of course, I have to add that for high oil prices, there is also Federal Reserve. Raising interest rates and shrinking the balance sheet will quickly "damage" economic growth. When the economy declines faster than market expectations, the market's expectations for crude oil demand will naturally decline, and oil prices will loosen.

Iran is still a key direction that has a small chance of affecting oil prices. The US-Iran talks resumed at the end of June. Market expectations in February and March were too high, but the final disappointment increased. This time the US and Iran resumed talks, the market paid very little attention. , The current environment of inflationary pressure in the United States is different. There is a strong need to suppress inflation expectations. Inflationary pressure in Europe is also not small. This time, Europe is still the one pulling the strings. Will it have an unexpected impact on oil prices? It deserves more attention.

In March, Brent oil price reached 139, which is already the high point of the year. Or if the oil price rises to 139 and becomes a bull for the year, which one will you prefer? (Views are for reference only)

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