Source: Guotou Anxin Futures Research Institute
The 32nd OPEC+ Ministerial Conference closed on September 5. The key points of the communiqué are as follows:
1. Reiterate the relevant decisions of the 10th OPEC+ Ministerial Conference in April 2020 and the 19th OPEC+ Ministerial Conference in July 2021. (Comment: The 10th session decided to start a huge production reduction in response to the COVID-19 pandemic and decided to increase production step by step to April 2022 according to the recovery of demand. The 19th session decided to set up a new production reduction baseline, adjust the step-by-step production increase to linear production increase, and increase production by 400,000 barrels per day per month from August 2021, and extend the agreement to the end of 2022. Reiterate that the previous decision also represents a certain extent that it is still in the current general direction to increase production to the baseline.)
2. Restore the output of OPEC+ member countries to the level in August 2022. The output level is only applicable to September 2022. (Comment: October cuts production by 100,000 barrels per day compared to September. OPEC+ June meeting decided to speed up production growth in July and August, and distributed the quota of 432,000 barrels per day originally scheduled to increase production in September to July and August. The increase of production by 100,000 barrels per day in September is an additional increase. The statement in the communiqué reflects the consistency of its production policy, but there is no doubt that the production in October is the same as in August, which also reflects a sharp slowdown in the production growth rate)
Figure: OPEC+ protocol production and production reduction benchmark
3. Continue to reiterate the importance of the compensation and production reduction mechanism. The 33rd OPEC+ Ministerial Meeting will be held on October 5. (Comment: Currently, the ministerial meeting is held once a month, and the October meeting will determine the output in November)
Overall, in the special topic "[GuoTou Anxin|Energy Review] The United States and Iran are in a deadlock again, and oil price support appears" on August 25, we pointed out: Since the OPEC+ protocol production mechanism is mainly countercyclical adjustment, the production increase stage generally corresponds to the rising cycle of oil prices, and active production cuts generally start under the background of a significant year-on-year decline in oil prices and relatively certain expectations for accumulated inventory. The bottoming effect on oil prices is greater than the upward driving effect, and it is difficult to become the main logic of market transactions at present. The results of this meeting and market fluctuations basically reflect this feature. Judging from the latest OPEC monthly report released in August, OPEC's expectations for non-OPEC supply in 2023 are relatively optimistic. Unlike the IEA and EIA that non-OPEC supply is difficult to hit a new high, OPEC monthly report expects non-OPEC supply to continue to rise in 2023, and the expectations of various institutions are mainly due to the large differences in expectations of Russian production. In addition, the recent progress in this round of Iran nuclear agreement recovery negotiations, it is relatively reasonable to increase the production rate of OPEC+ is becoming more cautious, but the later production trend of will mainly depend on the situation of Iran and Russian oil exports. It is currently not judged that OPEC+ has entered a production cut cycle. Under the assumption that EU strictly implements the Russian maritime oil embargo and Iran's oil exports continue to be sanctioned, call on OPEC (global demand-non-OPEC supply) will continue to rise, and it is inevitable that OPEC+ will continue to increase production.
On the contrary, if Iran or Russia's oil exports are expected to be significantly increased, OPEC+ is expected to enter a new round of frozen production or production cut cycle. Judging from the previous history of increase and decrease in production, the United States issued the "Comprehensive Sanctions on Iran, Accountability and Discontinuing Act" in July 2010. Saudi Arabia began to increase production rapidly and expand exports from July 2010, and by the beginning of 2012, the output increased by 1.5 million barrels per day; after the signing of the Iranian nuclear agreement, OPEC+ began a new round of production cuts and Iran was exempted in 2016; in the second half of 2018, Iran's production fell by 1 million barrels per day, and Saudi Arabia increased its production by 800,000 barrels per day during the same period. Overall, Saudi Arabia, as the most important motorized oil-producing country, often complements Iran's production policies and changes in production. In contrast, the Saudi agreement has entered the late stage of increasing production. If the final decline in Russian oil exports next year is relatively small, Iranian crude oil will return to the market and drive crude oil inventories to return to the five-year average next year, and oil prices will be pessimistic, Saudi Arabia will likely lead OPEC+ to start a new round of production cuts next year.
Summary, the crude oil market is still in a high-level fluctuation and top-up situation where inventory turning point is difficult to confirm. The supply cuts in Beixi No. 1 have further aggravated the European energy crisis. The relatively positive effect of high gas prices on crude oil prices and diesel cracking continues to appear. OPEC+ symbolic production cuts once again show its ability and confidence to stabilize the market. The current price may be at the lower level of the high-level oscillation range, so it should not be too pessimistic. However, there is a high uncertainty in the future. If one side's output increase is confirmed next year, the inventory turning point will be confirmed. At that time, the risk of downward oil prices will increase, otherwise the high-level oscillation pattern will still be difficult to break.
This article is from the financial industry
