Poor liquidity, sharp fluctuations behind oil prices decline
Baghdad (IraqiNews.com) – Low liquidity and sharp swings in the futures market have caused prices to fall far short of market fundamentals, the State Petroleum Marketing Organization (SOMO) said in a statement endorsing the comments of Saudi Energy Minister Prince Abdulaziz. bin Salman earlier this week.
Saudi Energy Minister Prince Abdulaziz bin Salman said extreme volatility and lack of liquidity means the futures market is increasingly disconnected from fundamentals and OPEC+ may be forced to cut its production, according to Bloomberg News.
SOMO added in its statement that Iraq is confident that the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, will continue to monitor the market and take appropriate action. necessary to achieve equilibrium in the oil markets.
Prince Abdulaziz represents the biggest oil producer in OPEC+, which is arguably the most important player in the 23-nation alliance. He said futures prices did not reflect underlying supply and demand fundamentals, which could force the group to tighten production when it meets next month to review production targets, mentioned Bloomberg News.
The Saudi energy minister had stressed that the OPEC+ alliance has the tools to deal with the challenges, and those tools include cutting oil production.