April was not a good month for oil prices, and everything indicates that the waterfalls experienced by the cost of barrels will continue in the coming months. Raw materials have held the barrel for many years, in the case Brent European, but they have reached this thanks to the efforts of the main manufacturers of the planet, the organization of countries -export oil countries (OPEC), a group that in recent years has preserved the production of limited crude oil to maintain prices, but which has already decided to postpone this strategy.
The leaders of the cartels seemed to have agreed to start a war with a proposal in order to punish, first of all, members of the group who did not fulfill their obligations, SO called “OPEC sparrows”, and it is assumed that a new surprise in the form of production will appear at the meeting next Monday, which threatens to deepen the fall in oil prices.
The last month was very negative for the prices of energy resources, to such an extent that the fall of 15.5%, which occurred in April in a barrel Brent They are the strongest, which were seen in one month since November 2021 and left a negative balance throughout the year for European oil. Raw oil is now quoting at least 2021, and from the maximum prices that were seen in January, they already lose more than 23%.
The reality of oil lies in the fact that there are many international markets, and that if prices have not fallen to these levels, this was due to the efforts of the organization of oil export countries to avoid it. OPEC and its external partners, a cartel known as OPEC+, for years supported a limited offer to avoid price collapse, but the group begins to leave this strategy, and this is one of the keys that explain the latest descents BrentField
Changing the OPEC+strategy: attack on Los Gorrones
The main force that was pressed to oil prices is associated with a proposal, although demand was also a bear component for the barrel. In early April with the price Brent In the vicinity of $ 75, the surprise jumped out: OPEC+ announced that they would begin in May to increase oil production, and that they would do it much faster than expected: 411,000 barrels per day from that moment.
This figure was four times more than expected for a cartel, and from the first moment it was assumed with pressure provided by Donald Trump for OPEC, demanding that he take measures to reduce raw oil prices. However, the reason for the decision, according to the delegates of the organization itself, was to punish Kazakhstan and Iraq to violate the agreements that were agreed. Both countries would produce more than agreed, which would benefit from higher prices than they would be if the whole cartel opened oil cranes for bumper.
This conflict with members, who were unfair to the cartel, for many years was permanent in OPEC, just as price wars were one of the large manufacturers of the energy resource, such as the one that occurred between Russia and Saudi Arabia in 2020. Now it seems that the Saudi kingdom, the meaningless leader of the UPEC, and which suggest most of the weight punishment. Give a lesson to those who were unfair to the rest of the cartel.
Another hypothesis that explains the unexpected OPEC+solution is associated with the competition that exists between the organization and its great current competitors in the international market: American manufacturers. This is in the interests of OPEC to expel their competitors from the market and, according to the International Energy Agency (IEA) in its last monthly report on oil West Texas At $ 58, this is not completed now.
Another increase in June?
Due to the fact that 411,000 barrels of new production, alleged by investors, the latest news in the oil market suggests that this figure will fail in June, and that OPEP+will be performed at the meeting on May 5, this figure will be increased over the next months. This is considered 60% of analysts surveyed by the agency Bloomberg This week and 13 out of 23 experts who participated in the survey, believe that an increase that will be announced the next Monday will be similar to what was prepared in May for a month.
And this is that the punishment for Kazakhstan, it seems, did not force the country’s leaders to change their production plan for raw oil. The Asian country has become a black OPEC sheep and openly admits that it will protect its interests and continue to produce gross oil to the rhythm, which it considers suitable.
Matt Reed, Vice -President of a consultant on foreign reports, indicated Bloomberg How “the calculation of the sentence is changing”, and emphasizes how “responsible producers have exhausted patience with cheats that continue to make excuses. The April decision was a surprise, but May could be a call to attention to wake up, ”he explains.
Demand falls through the tariff war
Another increase in supplies in June will undoubtedly help to press the prices of raw oil, and more at the time when all the factors are leveled, so oil is checked. Keep in mind that raw oil did not notice the chaos that occurred in April after the announcement of Donald Trump to start a tariff war against the world.
Experts, as well as markets, suggested that the measures imposed by Trump will worsen the world economy, and the braking provided by growth also affects oil, one of the raw materials most attached to the economic cycle in the market. The last forecasts of the International Energy Agency (IEA), thus, confirm: in April, it considered its assessment on demand and proposal, with the expected increase in demand by 730,000 barrels the next year, while the proposal will grow by 1.2 million barrels. Thus, the balance, which can be in the equation of raw sentences and offer, will be violated in 2026 this year if the MAA estimates are executed.
And these will be not only OPEC producers who will open TAPS next year: other manufacturers, such as Canada and Gayan, will continue to increase production next year, which feeds the fear of excess position in 2026, which ultimately plunges at barrel prices. Morgan Stanley warns, indicating that he expects “significant overproduction” in the coming years.
