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OPEC surprised with a slight cut in production.

Alternavest Author

06.09.2022

Opec's key takeaway was that the global economy is certainly slowing. This is not good news for equity markets, especially if OPEC is now, as it seems, very wary of a drop in oil prices as a result. 

 

This means that equity valuations around the world will face both a slow economic environment and stubbornly firm oil prices. Natural gas prices, on the other hand, are likely to remain very strong. Even if gas prices fall sharply in this country, energy is still about twice as expensive as it was before the crisis.

Inhalt

  • This is not just a European crisis.

This is not just a European crisis.

Gas supplies are diverted from the USA and other countries. Prices in these countries have risen accordingly. This is a global process that is reaching every corner of the economy. 

 

The one bright spot of late has been the significant drop in the price of oil, which I had also expected. Although I had anticipated the global economic slowdown, the extent to which the oil price had declined seemed a bit extreme. Obviously, OPEC is of the same opinion. 

 

We can assume that the oil price will settle at the current level. If not immediately, certainly in the coming weeks and months. As the global economy slows, OPEC will reduce supply to keep prices up. This means that the supportive nature of a free-floating oil price has disappeared. Add to this the negative impact of lower consumer spending in the world's three largest economies, the U.S., the EU and China. 

 

Since high energy prices, along with food, were a major factor in consumers' initial reluctance to spend, we should not be too positive about the consequences of this latest OPEC decision.

inside-alternavest.article.information

OPEC surprised with a slight cut in production.

Opec's key takeaway was that the global economy is certainly slowing. This is not good news for equity markets, especially if OPEC is now, as it seems, very wary of a drop in oil prices as a result. 

 

This means that equity valuations around the world will face both a slow economic environment and stubbornly firm oil prices. Natural gas prices, on the other hand, are likely to remain very strong. Even if gas prices fall sharply in this country, energy is still about twice as expensive as it was before the crisis.

inside-alternavest.article.writtenBy Massimo Di Santo.
Alternavest Partners GmbH Otto-Heilmann-Str. 17 82031 Grünwald

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