Oil: the new Arab scenario

#XTIUSD

Key zone: 64.00 - 65.50

Buy: 65.50 (on a pullback after a correction to the 65 level); target 67.50-68.50; StopLoss 64.80

Sell: 63.50 (on strong negative fundamentals); target 61.50-60.00; StopLoss 64.20

The policy change of OPEC+ on production came as a shock even to professional speculators. The market has not seen such an adventure even in extreme periods, including the COVID-19 pandemic.

The Cartel could have increased volumes rhythmically by about 100K bpd, but already in May they added 480K bpd and the pace is accelerating. Moreover, starting from September, voluntary cuts of 2.2M bpd introduced in 2023 are being cancelled.

This aggression forced the IEA to revise forecasts. According to the new data:

• The oil surplus in 2025 may reach 1.7M bpd,
• In 2026 — almost 3M bpd.

Under such a scenario, prices will naturally search for a new bottom. Does OPEC+ really need a global collapse?

The real goal of the Cartel is to expand its share of the global market through blackmail and to push “foreign” oil out. Arab oil is not ready to cede volumes to non-OPEC+ competitors, primarily the US and Brazil.

Moreover, new capacities are being actively developed. For example, Saudi Arabia is implementing new projects with a total output of up to 650K bpd. Both the Saudis and the UAE can easily withstand market prices at $40 per barrel or lower, something most competitors cannot afford. The first major victim will be US shale. And Trump with all his political aggression won’t help it.

When fundamental factors are insufficient, the market turns to geopolitics, where arguments are always abundant — wars, sanctions, infrastructure attacks, technological disasters. Now prices are mainly pressured by fundamentals, but geopolitical flare-ups periodically scare the market, forcing speculators to urgently close shorts, which results in $10–15 “spikes” in both directions.

The nearest event is the OPEC meeting on September 7, where another production increase is expected to be approved.

For now, both benchmarks remain within last week’s range. The market is influenced by:

• Expectations of US sanctions against Russian oil,
• Ukrainian attacks on Russian energy infrastructure,
• Uncertainty regarding Trump’s tariff policy and its impact on demand for basic fuels.

Short-term risk appetite rose slightly after Powell’s speech, but that effect is already exhausted. The market is now in waiting mode — either for political triggers or for the first signs of Trump’s tariffs impacting demand.

P.S. Of course, demand will stabilize fairly quickly and oil will return to a comfortable range of $80–100 per barrel. But right now the key question is being decided — who will dominate the global market once this balance is restored.

So we act wisely and avoid unnecessary risks.

Profits to y’all!