According to Bank of America, OPEC + producers led by Saudi Arabia have launched a “slow” oil prize war “which could last more than a year, according to Bank of America. OPEC + has agreed to increase oil feeding by 411,000 barrels per day for two consecutive months, after having reduced production for years. Oil prices have dropped at the lowest level in four years earlier this week in response, as the increase in supply coincided with President Donald Trump's trade war. “The question is not as long as the OPEC + is in the midst of a price war, but rather of what type of price war is and what are the objectives,” said Francisco Blanch, responsible for global research on basic products and derivatives in Bank of America, told customers in a note on Wednesday. The Saudis have three central goals, said the strategist. Long war for market share The Kingdom wants to recover the market share of American shale production, said Blanch. He also wants to punish the members of OPEC + who deceived their production cups. And the low oil prices would soften the inflationary impact of Trump's prices. “There is no doubt that OPEC + needs a plan to recover a market share after the spectacular increase in American oil production in the past 15 years,” Blanch told customers. Goldman Sachs also sees the OPEC + strategy of the Saudis far from the emphasis on the stabilization of prices to “strategically discipline the supply of American shale and on support for internal cohesion and the demand for oil”. The company expects the group to stimulate the offer of 411,000 other barrels in July. OPEC + has led to three price wars in the past 30 years, Brent prices have on average $ 45 a barrel in the two most recent conflicts in the last decade, Blanch said. The most recent prize war in 2020 lasted only four months while the Saudis sought to force Russia to accept production cuts. This time, however, the oil market is probably faced with an extended battle on prices that could jump for 12 to 18 months, said Blanch. “This last OPEC + action seems to us more as a” slow burn “than a quick and furious price war”, “said Blanch. “Because the prize war has an element of market share, a political element and a group discipline element, we think it will probably be long.” American shales are already taking some low oil prices combined with prices and fears of recession “are already beginning to have an impact on supply, American shale producers signaling the start of a decline in activity,” Citi analysts told customers on Thursday. The CEO of Diamondback Energy, Travis Sice, warned the shareholders this week that the production of American shale is likely to culminate and start to decrease due to the drop in oil prices. Diamondback is the sixth petroleum producer in the 48 lower states and the third largest in the Permian Prolian basin, according to spray data. Adjusted for inflation, there have been only two quarters since 2004, when the oil prices of the first month were as cheap as today, excluding 2020 when the Pandemic COVID-19 swept the world, STICE told investors in its Monday letter. The operators that Diamondback speaks with everyone agree that “this oil price does not work”, the president of the company Matthew Kaes Van't Hof said analysts on Tuesday on the call for results of the company's first quarter. Bank of America sees Brent prices reaching $ 58 per barrel in the second quarter, although the company maintains a price forecast of $ 62 for 2025. Goldman Sachs reduced its $ 2 to $ 3 forecasts this year: he now sees Brent and American gross with an average of $ 60 and $ 56, respectively, for prices for 2025. declared. Oil prices must be of the means at $ 60 and on a $ 70 road for production to increase, he said.
OPEC + waged oil prices war – here's what the cartel wants
