OPEC + Failure: What Can Stop Oil Price Rising Now?

OPEC + yesterday failed to reach a compromise. And the situation finally hung in the air. On the one hand, the absence of an increase in production in August and beyond is a powerful bullish signal against the backdrop of a recovery in demand. So the growth of the asset looks more than logical. On the other hand, current events are the failure of OPEC +, the next step after which may be the collapse of the alliance as such.

Given the strategic importance of the oil market, today we will talk about what can stop the growth of oil.

In general, it should be noted that the recent consensus in the oil market is such that the positive is being worked out with a vengeance, while the negative is usually not noticed. That is, the price of oil is, in fact, held hostage by market sentiments. And this is always a factor of increased danger, because sentiments are volatile, and prices become extremely vulnerable because of this.

Therefore, today we will talk about what can change the mood. We have already written about Iran, but we will remind you. The lifting of the sanctions could provoke an increase in production in the future up to 2 million bpd. And Iran has accumulated about 60 million barrels in storage facilities, which it can start actively selling.

But that's not all of the supply-side threats. The sleeping giant (American slate) may finally wake up and then it will not seem enough to everyone. Current prices are more than favorable for field re-entry and production growth.
As for the component of demand, there are plenty of threats here as well. China, for example, a year ago filled its storage facilities with cheap oil. And it looks more than logical on his part, instead of buying oil at the current $ 75, to pump oil from the storage facilities, bought at $ 20 - $ 30.

And there is also the potential threat of renewed trade wars between the US and China, and the delta strain continues to harvest, threatening the recovery of the global economy and oil demand.

It seems to us that the markets greatly underestimate all these factors; therefore, the current prices seem unfair to us, and we will continue to sell oil.