Brent oil prices faced pressure at the start of the week, falling nearly 3% to $73 per barrel. This decline was triggered by the potential for a ceasefire agreement between Israel and Hezbollah, according to Carsten Fritsch, a commodity analyst at Commerzbank.
OPEC+ May Delay Production Increase
Despite ongoing tensions in the Middle East, the conflict has not yet caused any supply shortages in the oil market. A ceasefire could help ease the conflict between Israel and Iran, which might prevent disruptions to oil supplies. Last week, fears of potential supply disruptions, sparked by the ongoing war in Ukraine, led to a 6% rise in oil prices—its largest weekly gain since the Iranian missile attack on Israel in early October.
Looking ahead, the upcoming OPEC+ meeting on Sunday is drawing attention. Azerbaijan’s energy minister has suggested that the group could consider maintaining current production levels beyond the end of the year. Although OPEC+ had previously planned a gradual increase in production starting in January, this move could lead to an oversupply in 2024, based on forecasts from the International Energy Agency (IEA).
A Bloomberg survey shows that most analysts expect OPEC+ to delay the planned production increase. Half of those surveyed predict that the production boost will be pushed back until the second quarter of 2024. Commerzbank also anticipates that OPEC+ will postpone the increase at least until the end of the first quarter.
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