Synopsis:

HSBC assesses the potential impact of OPEC+'s upcoming decision on crude oil production. The group faces a challenging choice between increasing output, which could lead to a market surplus, or holding off, which might signal weak demand. HSBC maintains its Brent price forecasts but notes rising downside risks.

Key Points:

1. OPEC+ Decision:

   • Upcoming Meeting: OPEC+ is set to decide on whether to proceed with planned production increases starting 1 October.
   • Potential Outcomes:
     • Increasing Output: This could create a significant market surplus starting 1Q 2025, potentially leading to negative market reactions.
     • Holding Off: This may be seen as an acknowledgment of weak oil demand, potentially affecting market sentiment.

2. Price Projections and Risks:

   • Current Forecast: HSBC maintains its Brent price assumptions at USD80/b for 2H 2024 and USD76.50/b from 2025 onwards.
   • Downside Risks: There is an increased risk of prices falling below the USD75-85/b range if a market surplus emerges earlier than expected.

3. Near-Term Outlook:

   • Possible Rebound: Crude oil prices could rebound if OPEC+ decides to delay output increases, offering temporary support to prices.

Conclusion:

HSBC anticipates potential volatility in crude oil prices depending on OPEC+’s decision. An increase in production could lead to a market surplus and lower prices, while a delay might support prices in the short term.