Impact of OPEC+ Deal On Global Crude Oil Market

Last Thursday witnessed a massive rise in crude oil prices for the fourth time this year. As a result, OPEC revised its policy to cut the overall supply of crude globally to deal with this price rise. After 2020, this will be the largest reduction in crude oil production, leading to a tight supply schedule for the commodity. 

Every day, the production will reduce by 2 million on average as per the new policy of OPEC. But the target levels are not fulfilled for many of the OPEC countries. The OPEC (Organization of Petroleum Exporting Countries) has collaborated through a formal agreement with a similar Russian group, OPEC+. It came in front of the whole world during the European Union. The tight market resulted in an inflationary situation all over the globe. The meeting with the Russian allies dealt with the squeezing of the crude supply and how to cope with the global price rise. 

According to US President Biden, this OPEC deal is not favorable for the interests of global crude oil users. Therefore, he has ordered a further assessment of the whole scenario before taking the necessary steps for lowering the crude prices. Expectedly, the White House stated that the President would release more oil stocks. This action can certainly have a positive impact on global oil prices and increase the supply also to meet the steady demand of the overall crude market. 

Analysis shows that these supply cuts, due to OPEC+‘s agreement, will keep the crude market tight until 2023. Moreover, the company has even planned to extend the deal leading to very low investments in the sector. As a result, as per the recent reports of EIA, the global market has already lost more than 1.4 million barrels of crude inventories. Now it will be crucial to find out the ultimate result of this OPEC meet after Joe Biden has intervened in the scene. 

Technical Analysis on Crude Oil

Fresh buying opportunity will occur only if level closes above $96.

Traders can buy crude oil around $85 thereby maintaining a strict stop loss of $81. We may witness an upside targets between $92—$96.