The OPEC+ group will not be racing to react to this week’s oil price plunge and will wait for financial markets to calm down after the banking sector scare, consultants at Energy Aspects said in a note carried by Bloomberg on Thursday.
“It would be premature for OPEC+ to take action without first understanding what the risks are,” Energy Aspects analysts said in the note.
The Fed and the European Central Bank (ECB) will need to “address market conditions before OPEC+ makes any moves,” according to the consultancy.
Oil prices plunged this week, settling on Wednesday at the lowest level in 15 months, after panic for Credit Suisse roiled the financial markets, rekindling concerns about the banking system following the collapse of Silicon Valley Bank (SVB) in the U.S. at the end of last week.
Early on Thursday, oil prices were slightly up, with WTI trading below the $70 mark, at $67 per barrel, and Brent at just below $74, down by 10% in three days.
But OPEC continues to see strong demand and fundamentals not justifying the selloff in oil, according to Energy Aspects.
“The last thing OPEC+ wants is to even mention a possibility of production cuts out of concerns that the market will misconstrue these comments as fear of demand weakness,” the analysts wrote in the note.
The OPEC+ Joint Ministerial Monitoring Committee (JMMC), the panel recommending oil policy actions, has a meeting slated for April 3.
There hasn’t been an emergency meeting of OPEC+ of any kind called in the meantime, Energy Aspects noted.
Earlier this week, before the Credit Suisse scare spooked markets, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told Energy Intelligence that the OPEC+ group would keep its oil production targets unchanged until the end of the year in view of the high level of uncertainty on the global markets and with global economic growth.