Ways2Capital Reviews : Uncertainty In OPEC Meeting Outcome Leads To Crude Oil Volatility

OPEC meeting along with some non-OPEC members including Russia is underway in Vienna. All eyes are on the outcome and the key things to watch out for would be whether OPEC raises its production, and by how much.

The OPEC and participating non-OPEC nations have been withholding oil production since 2017. However, with faster than expected decline in Venezuela production and risk of Iran sanctions, pressure is mounting on OPEC to increase the production to an extent to maintain the balance amid rising demand. Russia is considering to raise production by ~1.5 million bpd.

However, Venezuela, Iraq, Algeria and Iran are opposing the move to increase production, since nations like Venezuela have little or no scope for increasing production in the current scenario.

Oil price is hovering around $73/bbl owing to the uncertainty about the nature of the outcome (whether in the favor of production increase or not). If the outcome comes in favor of production increase, we can see some fall in oil prices. This decline will be beneficial for oil marketing companies (OMC) like HPCL, BPCL and IOC, which are waiting for this trigger amid their attractive valuations.
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About Bhoomi Desai