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OPEC’s Barkindo: Common Objective with Non-OPEC Partners is Market Stability

OPEC Secretary-General Mohammad Barkindo (Reuters)
OPEC Secretary-General Mohammad Barkindo (Reuters)
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OPEC’s Barkindo: Common Objective with Non-OPEC Partners is Market Stability

OPEC Secretary-General Mohammad Barkindo (Reuters)
OPEC Secretary-General Mohammad Barkindo (Reuters)

The common objective of the Organization of the Petroleum Exporting Countries and its non-OPEC partners has always been to maintain oil market stability, not to raise prices or bring them down, OPEC Secretary-General Mohammad Barkindo said on Saturday.

Asked whether bringing 9.7 million barrels a day back to the market according to the latest adjustment decision by OPEC+ would help bring oil prices down, he said “we cannot dictate to the market what it does.”

However, he stressed that the task to continuously bring supply and demand in balance is the responsibility of all producers.

He made his remarks during his participation in the sixth edition of Iraq Energy Forum organized by the American University in Baghdad.

“We are working with our allies to develop the oil market, achieve balance, and organize supply in the market according to understandings between OPEC members and their allies,” Barkindo told reporters.

“We will continue our steps to achieve price balance in the oil market,” he added, praising Iraq’s role in supporting OPEC decisions to stabilize oil prices during the past years.

He said Iraq is able to show its support for the organization and that it is the first country to support price stability decisions.

The two-day forum kicked off on June 18 under the theme “Global Energy Security in Times of Conflict and Uncertain Economic Recovery.”

It discusses issues and files related to the energy, oil and gas sector, with the participation of a number of foreign companies operating in Iraq.

Brent crude is trading at $120 per barrel and is expected to reach $150. Some fear it keeps going higher, with wild chatter about oil hitting $175 or even $180 by the end of 2022.

OPEC’s top diplomat told European Union officials in April that the current crisis in global oil markets caused by Russia’s invasion of Ukraine is beyond the group’s control.

Russian oil supply losses stemming from current and future sanctions or a boycott by customers could potentially exceed seven million barrels a day, Barkindo said.

He pointed out that markets are being swayed by political factors rather than supply and demand, leaving little for the organization to do.

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Investors Weigh Market Risks as Israeli-Iranian Tensions Rise

Traders monitoring the movement of stocks on Wall Street (Reuters)
Traders monitoring the movement of stocks on Wall Street (Reuters)
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Investors Weigh Market Risks as Israeli-Iranian Tensions Rise

Traders monitoring the movement of stocks on Wall Street (Reuters)
Traders monitoring the movement of stocks on Wall Street (Reuters)

As the conflict between Israel and Iran escalates, investors are analyzing several potential market scenarios, especially if the United States deepens its involvement. A key concern is a sharp increase in energy prices, which could amplify economic consequences across global markets.

Rising oil prices could fuel inflation, weaken consumer confidence, and diminish the likelihood of interest rate cuts in the near term. This may prompt initial stock market sell-offs and a flight to the US dollar as a safe-haven asset.

While US crude oil prices have surged by around 10% over the past week, the S&P 500 index has remained relatively stable, following a brief decline after the initial Israeli strikes.

Analysts suggest that if Iranian oil supplies are disrupted, market reactions could intensify significantly. A serious supply disruption would likely ripple through global petroleum markets and push oil prices higher, leading to broader economic consequences.

Oxford Economics has outlined three possible scenarios: a de-escalation of conflict, a full suspension of Iranian oil production, and the closure of the Strait of Hormuz. Each scenario carries escalating risks to global oil prices. In the most severe case, prices could soar to $130 per barrel, pushing US inflation to nearly 6% by year-end. In such a scenario, consumer spending would likely contract due to declining real income, and any possibility of interest rate cuts this year would likely vanish under rising inflationary pressure.

So far, the most direct impact has been felt in oil markets, where Brent crude futures have jumped as much as 18% since June 10, reaching nearly $79 a barrel, the highest level in five months. Volatility expectations in the oil market now exceed those of major asset classes like equities and bonds.

Although equities have largely brushed off the geopolitical turmoil, analysts believe this could change if energy prices continue to climb. Rising oil prices could weigh on corporate earnings and consumer demand, indirectly pressuring stock markets.

While US stocks have held steady for now, further American involvement in the conflict could spark market anxiety. Historical patterns suggest any sell-off might be short-lived. For instance, during the 2003 Iraq invasion, stocks initially dropped but recovered in subsequent months.

As for the US dollar, its performance amid escalating tensions could vary. It may strengthen initially due to safe-haven demand, although past conflicts have sometimes led to long-term weakness, especially during prolonged military engagements.