Oil prices increased this Monday after having announced on Sunday by OPEC+, which includes the Organization of Petroleum Exporting Countries (OPEC) and other producers such as Russia, that it will sustain a joint production of 40.46 million during 2024 barrels per day, thus consolidating previously announced cuts.
According to the agreement, OPEC countries will maintain their production throughout next year at 24.994 million barrels per day, while producers outside the organization will supply 15.469 million barrels per day.
However, many of these deflations will not be real, as the group lowered targets for Russia, Nigeria and Angola in order to bring them in line with their current production levels. In contrast, the United Arab Emirates has been able to increase its production.
OPEC+ pumps close to 40% of the world’s crude oil, which translates into political decisions that have a great impact on oil prices. The producers’ association currently has an alliance in place to reduce the 2 million barrels per day agreed last year and which is equivalent to 2% of world demand. In April, it also agreed to a surprise voluntary cut of 1.6 million barrels that took effect in May until the end of 2023.
In turn, Saudi Arabia will cut its production in July, as part of a broader OPEC+ production cap arrangement, as the group grapples with falling oil prices and an imminent excess supply. Riyadh’s 1 million barrels per day (BPD) cut could be extended beyond July if necessary, says Saudi Energy Minister Prince Abdulaziz. “It is a Saudi lollipop,” he maintains.
The oil companies and companies linked to the energy sector are the main beneficiaries of this cut in production through engineering, deposits, among others. The sector has ample upward potential on the stock market after its good year 2022. So far this year, the STOXX Europe 600 Oil & Gas has fallen 4.6%.
Repsol shows a twelve-month potential from its current price of 30% to 17.24 euros per share, according to Reuters. The Spanish company led by Josu Jon Imaz fell 8.7% on the Ibex 35 this year, with interesting ratios such as a dividend yield of 5.13% and an estimated PER for this year of 3.9 times.
Outside our borders, the companies that promise the greatest upward potential on the stock market are the British Shell and BP with 35.24% and 30.12%, respectively. The Reuters analyst consensus gives Shell room to rise to £3,090.21 and BP to £615.42.
Among the oil companies in the eurozone, the one that investment banks see the most options are Galp with 28.6% up to 13.51 euros per share, the Italian Eni is given a potential of 26.09% up to 16.52 euros per share and TotalEnergies sees a possible upward trend in the French CAC 40 from 19.6% to 65.6 euros per share.
Published by Emirates Herald, news and information agency.