Potential Opec+ cuts extending to Q3 may further support oil price: Oxford Economics

outlooks reflect that on the Qatari sovereign rating.

The banks’ GSRs of ‘a’ are in line with Fitch’s D-SIB GSR of ‘a’; reflecting Fitch’s view that the Qatari authorities have a strong propensity to support domestic banks, irrespective of their size or ownership.

They also have a strong ability to do so, as indicated by the sovereign rating and substantial net foreign assets and revenue, albeit weakened by the Qatari banking sector’s high reliance on external funding and rapid asset growth in recent years. The ‘a’ GSR for Qatari D-SIBs is three notches below the sovereign ‘AA’ IDR.

The seven banks’ short-term IDRs of ‘F1’ are the lower of two options mapping to ‘A+’ and ‘A’ long-term IDRs because a significant proportion of the banking sector’s funding is governmentrelated, and financial stress at these banks likely to come at a time when the sovereign itself is experiencing some form of stress.

Potential OPEC+ cuts extending to the third quarter (Q3) could further increase oil price, Oxford Economics has said in a report.

Oil prices have been on an upward trend year-todate, with last week’s prices surpassing $86 per barrel – the highest level since November 2023. This, Oxford Economics noted, has been mainly driven by recent geopolitical developments and expectations for US Federal Reserve rate cuts. According to Oxford Economics, oil prices have been “volatile” lately due to various global events. However, since December 2023, prices have trended upward, fuelled by expectations surrounding the US Federal Reserve’s rate decision, the ongoing Middle East conflict, Eastern Europe war developments, and declining US oil rig counts.

Last week, prices surpassed $86 per barrel, the highest since November 2023. There is a chance Opec+ cuts might extend to Q3, potentially amplifying upward pressure on prices.

Optimism regarding potential US rate cuts and the possibility of a Gaza ceasefire could enhance oil demand and market movements, potentially alleviating upward pressures, Oxford Economics said.

In another report, National Bank of Kuwait said the oil market at this juncture seems relatively balanced risks-wise and could auger a period of reduced price volatility compared to the fourth quarter (Q4, 2023) especially with Opec+ producers unlikely to change production policy until at least June. Meanwhile, a Reuters dispatch said oil prices advanced following two consecutive sessions of decline, as investors anticipated tighter supplies given the Opec+ producer alliance is widely expected to stay the course on its current production cuts. “We expect US inventories to rise less than normal in reflection of a global oil market in a slight deficit,” SEB analyst Bjarne Schieldrop said. “This will likely hand support to the Brent crude oil price going forward.”

US refinery utilisation rates, which rose 0.9 percentage points last week, also supported prices.

It said investors will watch for cues from a meeting next week of the Joint Monitoring Ministerial Committee of producer group the Organisation of Petroleum Exporting Countries (Opec+). Increased geopolitical risk has raised expectations of possible supply disruption, but Opec+ is unlikely to make any oil output policy changes until a full ministerial gathering in June.