Factors Driving Brent Prices Lower Amid OPEC+ Disagreement: Uncertainty About Debt Ceiling Deal, China’s Demand, and More

Brent is down 4% today, which may be due to several factors. The US media is talking about uncertainty about the debt ceiling deal, as several Republicans have indicated that they will not support the bill. In addition, there are increasing questions about China and further growth in demand.

However, the key factor likely to drive prices lower at the moment is disagreement within the extended OPEC+ cartel. Recently, Saudi Arabia’s oil minister warned contract sellers of the possibility of OPEC+ action, which could indicate further potential production cuts. On the second side the Russian energy minister claims that Russia is satisfied with the current development of events and prices. However, there have been indications that Russia may also be mining and exporting more than the cartel’s internal arrangements stipulate. This threatens a possible “breakdown” of the whole deal, which could lead to a supply return of up to 2 million barrels per day, although of course one must bear in mind the limited capacity for such a rapid increase in production. However, recently Iraq or the UAE are said to have indicated that they would like to mine more.

The sharp drop in Brent crude was triggered by uncertainty about the sustainability of the OPEC+ deal and uncertainty about demand from China or globally if the US eventually defaults. The closest support is around $68 per barrel, where the 23.6 retracement is located. Source: xStation5

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