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LONDON, Aug 18 (Reuters) – A recent drop in oil prices reflects fears of an economic slowdown and masks physical market fundamentals, OPEC’s new secretary general told Reuters, as he adopted a relatively optimistic view of the outlook for 2023 as the world tackles rising inflation.
Haitham al-Ghais, who took office on August 1, said demand for oil was robust in the physical market, concerns about China’s economic slowdown were overblown and demand would likely be supported by the use of the kerosene as people travel more.
The price of Brent near record highs of $147 a barrel in March after Russia’s invasion of Ukraine exacerbated supply issues. Prices have since moved lower and hit a six-month low below $92 this week.
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“There is a lot of fear,” Al Ghais said in an online interview. “There’s a lot of speculation and anxiety, and that’s the main reason for the price drop.”
“While in the physical market, we see things very differently. Demand is still robust. We still feel very bullish on demand and very bullish on demand for the rest of this year.”
“The fears about China are really disproportionate in my opinion,” said Al Ghais, who worked in China for four years earlier in his career. “China is still a place of phenomenal economic growth.”
The Organization of the Petroleum Exporting Countries, Russia and other allies, known as OPEC+, reversed record oil production cuts made in 2020 at the height of the pandemic and, in September, are increasing oil production of 100,000 barrels per day.
Ahead of the next OPEC+ meeting to be held on September 5, Al Ghais said it was premature to say what OPEC+ will decide, although he was positive about the outlook for next year.
“I want to be very clear about this – we could reduce production if necessary, we could add production if necessary.”
“It all depends on how things go. But we remain optimistic, as I said. We see a slowdown in 2023 in demand growth, but it shouldn’t be worse than what we’ve seen. historically.”
“Yes, I’m relatively optimistic,” he added of the outlook for 2023. “I think the world is handling the economic pressures of inflation very well.”
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(Reporting by Alex Lawler, Rowena Edwards, Dmitry Zhdannikov, Maha El Dahan and Olesya Astakhova, Editing by Veronica Brown and Barbara Lewis)
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