OPEC+ cuts that steadied market now bring risk of US$100 crude - BNN Bloomberg

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Oil's rise toward US$100 a barrel is exposing some of the risks in OPEC+'s controversial production cuts.

For about a month, the group's decision appeared to fulfill its stated aim of stabilizing oil markets, with crude prices steadying against a deteriorating backdrop for fuel demand. Now, at the mid-point between the Oct. 5 OPEC+ meeting and the group's next gathering in December, prices have moved close to triple digits again as the seasonal demand peak threatens to coincide with additional sanctions on Russian supplies.

The run-up in prices, just as the U.S. votes in midterm elections, threatens to further inflame relations between Joe Biden and Saudi Arabia, the cartel's defacto leader. The president has fiercely criticized the kingdom for the supply curbs, accusing the long-time American ally of abetting fellow OPEC+ member Russia in its war on Ukraine.

Instead of the potential shortage that was being predicted a few months ago, global markets now faced a surplus this quarter, according to OPEC Secretary-General Haitham al Ghais. “From the viewpoint of someone wanting to be preemptive about the balances, you would probably be happy you cut when you did,”said Paul Horsnell, head of commodities research at Standard Chartered Bank. In recent days, however, oil prices have gained momentum. Tentative signs of re-opening in China pushed prices higher on Friday, and the advance continued on Monday.

 

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