Investing.com — On Thursday, Stifel analysts acknowledged a Reuters article that said OPEC+ may be gearing up to boost oil production despite the possibility of cutting prices in the near term.
The company noted that the production increase, which had been planned for December 1, would mark a shift from the group’s recent delays in increasing production for October and November.
Saudi Arabia, which leads the group, appears willing to sacrifice prices to regain market share, although the country is not expected to unleash an all-out price war, Stifel said.
They highlighted that Saudi production had fallen significantly from a peak of 11.0 million barrels per day (mbpd) in 2022 to around 9.0 mbpd in July 2024, less than 10% of global supply.
Total OPEC+ production currently stands at 41.7 million barrels per day. The potential production increase would weigh heavily on oil prices and oilfield stocks, according to the company.
They note that US production has also increased, up 1.1 million barrels per day from 2023 levels.
In terms of market impact, Stifel suggests that tanker stocks including International Seaways (NYSE:), Scorpio Tankers (NYSE:), Ardmore Shipping (NYSE:) and DHT Holdings (NYSE:) could benefit from increased production.
However, they believe that oil services stocks could face headwinds. Stifel recommends sticking with high-quality names in this environment, such as Baker Hughes, Liberty Energy and Cactus (NYSE:).
China, the world’s largest importer of , would remain a wildcard.
“While difficult to estimate, it appears officials are working on stimulus measures to meet the 5% economic growth target by 2025,” Stifel wrote. “China’s oil demand is around 16.8 million barrels per day, barely higher than in 2023, after growing by 2 million barrels per day in 2023 compared to 2022. Oil demand in China has been has been a major driver of global oil demand for ten years and remains a critical variable in the economy. global oil consumption.”
Meanwhile, the company says midstream companies are expected to fare better in the face of weaker prices, with diversified names like Enterprise Products Partners (NYSE:), Energy transfer (NYSE:) and MPLX (NYSE:) are better positioned to weather the volatility.
