Oil futures, which reached a peak in 2023 due to Saudi Arabia’s daily cut of 1 million barrels and restrictions imposed by Russia, have started to decline due to global economic anxieties and the Federal Reserve’s persisting high rates. This development comes despite expectations of a record 13.1 million barrels and an anticipated supply deficit by year-end.
The peak earlier this year was primarily influenced by Saudi Arabia’s decision to reduce its oil output by 1 million barrels per day, coupled with restrictions from Russia. However, recent global economic concerns and the Federal Reserve’s continued high rates have led to a downturn in oil futures.
Robert Yawger, an analyst at Mizuho, highlighted potential increases in oil supply. These include possible contributions from Iran, Iraqi Kurds via the Ceyhan pipeline, Suriname, and Guyana. These potential additions to the supply chain are significant factors to consider against a backdrop of a previously predicted $150 oil forecast.
Despite the anticipation of a record 13.1 million barrels and an expected supply deficit by the end of the year, these potential increases in oil supply could balance out the market dynamics. The evolving situation underscores the influence of global economic conditions and policy decisions on commodity markets.
Overall, these developments indicate that while production cuts and restrictions had previously driven oil prices to their peak in 2023, current global economic worries and potential increases in supply are exerting downward pressure on oil futures.
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