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OPEC will need to make deeper supply cuts to keep oil prices above US$60 per bbl, according to 69 per cent of those surveyed in the Gulf Intelligence (GIQ) monthly Energy Market Survey in August

At the start of July, OPEC, with Russia’s backing, agreed to extend to March 2020, oil production cuts of 1.2 mmbbl per day, but Brent prices have struggled to hold steadily above the US$60 per bbl mark. US sanctions on Iran’s oil exports and heightened geopolitical tensions in the Gulf have failed to boost prices further.

Brent crude averaged comfortably in the mid US$60’s during the first half of the year. The average held at US$63.92 per bbl in July but dropped to US$58.93 per bbl in August. Weaker global economic growth forecasts and ongoing trade disputes between China and the US are dampening demand sentiment.

Around 45 per cent of those surveyed said that OPEC should change its current strategy of prioritising higher prices and instead fight for market share. OPEC will next meet in Vienna on 5 December.

During July, the majority of those surveyed by GIQ felt that the tanker standoff in the Strait of Hormuz between Iran and the UK, Washington and others would get worse before it got better and the feeling remained the same in August, with 65 per cent expressing their greatest concern for the oil markets. Approximately 24 per cent said that US President Trump’s erratic tweets were the biggest concern, while only 12 per cent attributed their main concern to changes in oil inventories.

In the meantime, 59 per cent of those polled said that the Chinese are more willing than the US to withstand the economic pain stemming from the new reality of trade tariff negotiations between the two largest economies in the world. As of August, the US imposed tariffs of US$250bn on Chinese goods and Chinese tariffs of US$110bn on US goods.