Crude oil prices remained in a narrow trading range due to OPEC+ cuts and sluggish demand

Although the Organization of Petroleum Exporting Countries (OPEC) Plus Group continues to suppress supply from the market, concerns about global oil demand have often been rekindled, so crude oil prices have remained in a narrow trading range of 75 to 90 dollars per barrel since the end of 2022.

According to LSEG data quoted by Reuters on Friday, Brent crude oil prices, which soared to levels over 100 dollars in the wake of Russia's invasion of Ukraine in early 2022, have been trading between 75 and 90 dollars since the end of 2022.

The Organization of Petroleum Exporting Countries (OPEC) + continues its policy of partially suppressing supply from the market, and maintains lower crude oil prices, but since OPEC member countries have large production capacity, traders are relieved that they can handle sudden production shutdowns. Even when World War II broke out in the Middle East in 2023, the size of OPEC+ supply capacity kept prices down.

OPEC+ has succeeded in keeping crude oil prices in the range of around $80 per barrel for the past 20 months.

OPEC+ has moved to implement further cuts as prices fall into the 70 dollar range for a long time.

However, prices have not reached 3 digits since the end of 2022 due mainly to concerns about the global economy, rising interest rates, and anxiety about sluggish oil demand in China, which is the world's largest crude oil importer.

Julius Baer analyst Norbert Ruecker told Reuters, “Currently, the oil market is sufficiently supplied, and the stagnation of demand in Western countries and China is evident.”

Earlier this week, ING said OPEC+ oil production policies remain a key factor in determining oil market conditions. ING predicts that crude oil prices will peak in the third quarter and then begin to decline from the end of the year to 2025. The forecast for Brent crude oil is that it will fall to 88 dollars per barrel in the third quarter of 2024 and 80 dollars for the full year of 2025. The main risk of this outlook is that if OPEC+ decides to maintain the full range of reductions, there is a possibility that the market deficit will prolong until 2025.