Opec To Increase Production

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Opec To Increase Production

Opec+ Plans To Increase Production

The latest report from Commerzbank's analyst reveals that OPEC+ is thinking about increasing oil production. It's worth mentioning that the last meeting also mentioned voluntary production cuts.

So on the one hand, there are talks about production cuts, while the OPEC+ members are also talking about ramping up production. According to Commerzbank, the increase in production will be a surprise for the entire oil market.

Fears Of Oversupply In Oil Market

Even today, a large majority of the market players believe that OPEC+ will not increase oil production. In fact, all the past meetings as of late only talked about more oil cuts.

So, if the OPEC+ surprises the market with a production increase, then it would increase the supply of oil in the market. And, a natural reaction to more supply and nearly the same demand would mean lower oil prices.

Commerzbank also added that the production increase will only amplify the oversupply threats. So, by the next year, there would be an oversupply of oil in the market.

So, if the OPEC+ goes ahead with the production increase, then it would be forced to cut the oil supply again in 2026. After all, that would be the only way to provide some support for the oil prices.

According to Commerzbank, the oil prices will slip under the $60 level in 2026. This would be the path of least resistance for oil if the OPEC+ goes ahead with a production increase.

Meanwhile, another threat to the entire oil market is that the world is now moving away from fossil fuels. The revolution of electric cars is already here, and we are in the midst of it.

In addition, many countries are actively working on power generation from alternative sources. So, when the oil is replaced with energy from wind, water, and solar, the demand for crude oil will go down significantly.

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