Factors Keeping Oil Prices Below $100 per Barrel

<p>Piracy
thrives in the Red Sea, and the International Energy Agency predicts an oil
deficit on the world market soon, but prices continue to fall.</p><p>In
fact, there is chaos in geopolitics, not only in the Middle East and Eurasia
but also in Latin America, <a href="https://www.tradingview.com/symbols/XAUUSD/" target="_blank" rel="follow">pushing the gold price</a>
to new all-time highs, yet oil does not react much.</p><p>Why is
this?</p><p>Despite
the war in Israel and Yemeni Houthi attacks on merchant ships in the
Bab-el-Mandeb strait, there are no disruptions in oil supplies.</p><p>The <a href="https://www.reuters.com/markets/commodities/opec-ministers-meet-discuss-additional-oil-output-cuts-2023-11-30/" target="_blank" rel="follow">recent OPEC+ meeting</a>
did not change things much, either. The alliance supported prices, but
production cuts were minor than expected:</p><ul><li>Saudi Arabia extended the current production cut, and Russia agreed
to extend the oil export cut by 300,000 barrels per day.</li><li>They also agreed to reduce the export of oil products by 200,000
barrels per day in the first quarter of 2024.</li><li>Some African countries were allowed to increase their production,
but other participants' quotas were reduced, resulting in a net deduction
of another 700,000 barrels.</li></ul><p>However,
the market was not impressed by these figures. Brent futures fell 2.5% below
$80 per barrel on the day of the meeting for the first time since January.</p><p>It is
also true that if there had been no consensus, prices would have plummeted even
further as the asset entered the market movers of the day, but in a bad way…</p><p>In
general, many are beginning to think that OPEC+ is losing control and cannot
compensate for increased production outside the alliance.</p><p>What
else is working against oil?</p><p>Unless
Iran goes to war with Israel or decides, on its own or with Hezbollah's help,
to blockade the Strait of Hormuz, an <a href="https://www.iea.org/reports/oil-market-report-october-2023" target="_blank" rel="follow">oil deficit is not expected</a> in the market. Supply
outside the OPEC+ cartel is growing, and there is a risk that demand will
decline next year.</p><p>Slowing
business activity in the eurozone reinforces expectations of recession, and
problems are mounting in the Chinese economy, with <a href="https://uk.advfn.com/newspaper/igorkuchma/70184/china-growth-less-than-expected" target="_blank" rel="follow">growth slowing</a>.</p><p>As for
the US, despite the country's plans to use low oil prices to replenish
reserves, the outlook for consumption is also not optimistic due to the
slowdown in consumer spending and business activity.</p><p>Finally,
yet importantly, the ESG agenda requires countries to discipline methods to
reduce hydrocarbon production, further impacting the oil market.</p>

This article was written by FL Contributors at www.forexlive.com.