Back to blog

Uncertainties between the largest oil producers

The Organization of Petroleum Exporting Countries and allies (OPEC+) is the group of countries that together contribute to 40 % of global oil production which means they can significantly control oil prices. Since oil is still one of the world's most prominent commodities, it can have a huge impact on everyday lives. Recently traders were anxiously expecting what the outcome of the latest OPEC+ meeting that happened on 30th of November would be. 

Uncertainties between the largest oil producers

The main agenda of the OPEC+ meeting was the oil production reduction for the year 2024. Oil prices have steadily been dropping since September 2023 with few bumps in October. Prior to the meeting, investors already expected some production cuts, so the market was quick to adjust. In addition to that, western oil demand has now dropped with continued boycott of Russian oil due to the war in Ukraine, transition to the green economy in Europe and countries trying to diversify their suppliers.

 

Finally, after the Thursday meeting, it was clear that production reduction will be even smaller than expected. The organization said it will cut the production by an additional 2.2 million barrels per day (bpd) in the first quarter of 2024. However, about 1.3 million bpd were already in place voluntarily by Russia and Saudi Arabia. That means that real cuts were about 900 thousand overall and traders were disappointed with the prices dipping even more. Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan and Algeria combined cuts amount to 2.2 million bpd will be gradual through the first quarter of 2023. Saudi Arabia agreed to gradually get to 1 million bpd cut until the end of Q1 while Russia will reduce production by additional 200 thousand bpd.

Brazil will be the newest member of the OPEC+ starting next year, although it hasn't agreed to any production cuts itself. Since the cuts were all voluntary, there are some speculations of disagreements among members.

 

China's lack of oil demand contributes to the concerns of investors as it is the world's largest oil importer. Its industry still hasn't recovered to pre-covid levels, and it shows little signs of improvement. The Caixin/S&P Global manufacturing purchasing managers' index rose from 49.5 in October to 50.7 in November, which is above the desired 50 milestone. However, the readings came the day after the survey which showed contractions in manufacturers’ as well as non-manufacturers’ activity.

 

Brent Crude futures for February have risen by 0.1 % in response to OPEC+ meeting outcome. Goldman Sachs Crude forecast for December is “moderately tilted” downwards after the meeting compared to previous estimates as they called oil producers move “a temporary response” and “difficult to implement”.[1]

 

Oil price remains volatile also because of tensions on the world’s stage with ongoing wars in Europe and the Middle east. Countries of the EU and elsewhere have failed to diversify their oil suppliers over the years which resulted in this commodity becoming a tool of control and hybrid warfare by superpowers with authoritative regimes.

 

-----

[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. Forward-looking statements, by their nature, involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied by any forward-looking statements.

 

Warning! This marketing material is not and should not be construed as investment advice. Past data is not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions may result in both gains and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. CAPITAL MARKETS, o.c.p., a.s. is an entity regulated by the National Bank of Slovakia.

Read more

SK Hynix Hits New High as It Builds South Korea’s Largest Data Center

SK Hynix Hits New High as It Builds South Korea’s Largest Data Center

For SK Hynix, a manufacturer of state-of-the-art semiconductors from Korea, 2025 has so far been as successful as the previous one. This proves that last year's 30% rise in share price was not accidental and the company is doing everything it can to maintain the momentum.* The latest is the plan to build the largest data center in cooperation with Amazon, which has the potential to strengthen the 50% increase in the value of shares since April, even further.

Apple and the Foldable iPhone: Could It Set New Sales Records?

Apple and the Foldable iPhone: Could It Set New Sales Records?

The first news about the possibility of starting production of a foldable iPhone bypassed technology enthusiasts at the end of last year, but unfortunately at that time it was only preliminary information, without a broader basis. We are currently in the middle of 2025 and analyst Ming-Chi Kuo of TF International Securities, a renowned expert on the Asian supply chain, commented on the situation. According to him, production of the foldable iPhone is likely to begin as early as 2026. Investors should not miss it, as this novelty would potentially have a chance to push stagnant sales.

Meta and Scale AI: What Will Zuckerberg Gain From the $14 Billion Bet?

Meta and Scale AI: What Will Zuckerberg Gain From the $14 Billion Bet?

At the beginning of last week, the first speculations appeared on the market about one of Meta's largest investments, namely the acquisition of a minority stake in the startup Scale AI founded by Alexander Wang. Preliminary information was subsequently confirmed on Friday, which also led investors to think about the possible impacts. Will Meta be able to reach the very top of AI innovation thanks to the new collaboration, or are the expectations too high? Will we see a new absolute high for Meta's share price soon?

Looking to Diversify Beyond U.S. Equities? M2C Is Going Public!

Looking to Diversify Beyond U.S. Equities? M2C Is Going Public!

When in 1992 a group of students decided to establish a company with the aim of providing services, probably none of them knew that three decades later, the company would stand on the threshold of the Prague Stock Exchange and head to America. Mark2 Corporation, M2C, has moved from a simple Facility Management (FM) to a high-tech ecosystem of services, which today operates in 13 countries in Europe, is expanding to the Middle East and the United States, and is preparing for an initial public offering (IPO) that you will soon be able to use.