OPEC predicts there will be an oversupply in crude oil. Due to OPEC's forecast that oil markets will tip into surplus by the third quarter, OPEC allies are unlikely to increase oil production.
OPEC has faced pressure from US, Japanese, and French governments in recent weeks. These countries are increasing the pressure against OPEC so that OPEC can increase the production of crude oil.
OPEC is unlikely to increase oil production
The reason for such mounting pressure is that these countries are facing unprecedented inflation which is resulted by the increasing crude oil price.
OPEC, however, is unlikely to increase oil production, according to its spokesman. This is because it is very likely that the increase in the interest rate and the economic recession will reduce the demand for crude oil.
OPEC reduces its forecast of the global oil market demands
OPEC reduces its forecast of the global oil market demands due to the economic recessions. OPEC reduces the expected oil production in the third quarter to 28.27 million barrels a day. In July, OPEC's 13 members produced about 570,000 barrels of oil more than this amount.
However, the forecast by OPEC is opposite to the International Energy Agency. The International Energy Agency increases the demand forecasts.
OPEC allies agreed on a minimal production increase
The reasons for the increase of the demand forecast include the soaring natural gas prices.
The increase in the natural gas prices forces many companies to switch to oil.
The difference in the outlook of OPEC and the IEA may explain why the OPEC allies agreed on only a minimal production increase.
