Perhaps, it helps unintentionally, but still helps. The production of the crude oil went down by 7 percent at the beginning of the year.
China is the biggest OPEC’s customer, and the current situation in the country will help oil suppliers to prop up the prices on oil.
Unfortunately for China, the country does not have too much choice as its own productivity, according to professional forecasts, is going to lose 7 percent during 2017. It will be the new record, after the huge decline in the last year.
The analysts from CLSA, Nomura Holdings, and Sanford C. Bernstein and Co. believe that the gap in a crude oil in China can save OPEC positions, and their intention to cut the production and hold the same prices.
According to the analysts, this number is equal to the output cut that officially was announced by Iraq, the second producer in OPEC. Last year Iraq has officially promised to cut its supplies to support the intention of OPEC who want to save high prices for oil.
The analyst from Hong Kong Nelson Wang says that with the Chinese oil decline OPEC will be able to implement their plans in life. He believes that even though China wants to receive more their own oil, the reality is that they can’t do this.
Meanwhile, China continues to be the biggest in the world consumer of oil. The problem with crude decline inside the country helps OPEC to hold the prices for their product on the same level.