Business
The price of oil has risen, production restrictions will ensure that it remains high
Dr. Gil Befman, Chief Economist of Bank Leumi, on OPEC countries' decision to maintain strict production quotas in April, despite rising oil prices: "The decision will keep the market tight in the near term." Main responsible for the situation: Saudi Arabia and the US administration The new
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Monday, 08 March 2021, 11:16 Updated: 11:45
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Dr Gil Befman, Leumi's chief economist, referred in the weekly oil review to OPEC's surprising decision to maintain tight production quotas in April, despite rising oil prices: "The decision suggests it intends to maintain a tight market over the near term.
The implication of this decision is that the OPEC + group leaves the reduction of oil production at the level of about 7 million barrels per day, about 7% of pre-crisis global oil consumption, despite the recovery in demand for oil.
In this situation, it is OPEC's entry into a state of considerable overcapacity.
OPEC + is expected to meet again on April 1 to decide on the group's steps and their response to developments in the market in May
, he said. High oil prices in the near future and also support a further reduction in global oil inventories.
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Dr. Gil Befman, Chief Economist of Bank Leumi (Photo: Oren Dai)
The Biden administration is expected to make it harder
Oil prices are expected to be sensitive in the near future to the degree of compliance of OPEC + members with production quotas, in which there may be deviations as high oil prices increase the viability of deviations of some of the group members with an emphasis on Iraq.
There is also importance to the volume of oil production in the US, as current oil prices increase the viability of increasing oil production through oil shale.
However, an increase in US oil production is not expected in the coming weeks and if there is such an increase it will be felt only later. This year.
Also, an increase in U.S. oil production is likely to face difficulties on the part of the U.S. administration that supports environmental protection. In these circumstances, changes in oil production are expected to be more relevant in the medium term and to a lesser extent in the near term.
US President Joe Biden with Saudi Prince Muhammad bin Salman (Photo: AP)
Expect an increase in demand for oil
So will oil prices continue to rise?
Not sure.
According to Befman, "The current rise in prices seems to be significantly priced, including the expected deficit in the oil market and the rise in demand during the second quarter of the year. Progress towards diversified global marketing of vaccines, which can be easily transported to low-developing countries "It is important for the potential increase in demand for crude oil in the future, which seems to be embodied today in a high degree of optimism" in the consensus "oil prices.
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