Oil analysts forecast a sustain rally in the liquid commodity price as Saudi Arabia prolonged its voluntary one-million-barrel oil supply cut through to the end of the year. Notably, the initial supply cuts seem to have yielded positive results, with oil prices experiencing a notable 12% increase in the past month (as of Sep 15, 2023), reaching approximately $91 a barrel.
Russia too has moved to draw down global inventories and vowed to cut oil exports by 300,000 barrels per day until the end of the year. Both countries have said they will review their voluntary cuts on a monthly basis. Analysts at Bank of America have indicated they now believe oil prices could soon rally above $100,
per a CNBC article.
According to Tamas Varga, an oil broker at PVM, the possibility of reaching the $100 price mark for oil seems "credible." This assessment is based on factors such as production limitations in Saudi Arabia and Russia, upcoming refinery maintenance, a persistent diesel shortage in Europe, and a growing agreement that the current phase of tightening in the market will soon conclude.
In its latest monthly oil report, the International Energy Agency cautioned that the limitations on oil production imposed by Saudi Arabia and Russia are expected to lead to a significant shortfall in the market throughout the fourth quarter.
The renowned global energy authority also pointed out that, despite OPEC and non-OPEC members reducing production by over 2.5 million barrels per day since the beginning of the year, this reduction has thus far been counterbalanced by increased output from countries not part of the OPEC+ alliance, such as the United States and Brazil.
Christyan Malek, global head of energy strategy and head of EMEA oil and gas equity research at JPMorgan, expects oil to trade at around $80 over the long term (read:
Energy ETFs in Focus as Saudi Likely to Prolong Output Cuts).
Against this backdrop, we highlight below a few country ETFs that can gain/lose if oil hits $100 soon.
ETFs to Gain Norway – Global X MSCI Norway ETF ( NORW Quick Quote NORW - Free Report)
Norway is among the top 10 nations famous for oil exports and with its comparatively low population, oil forms the key part of the country’s GDP. Per U.S. Energy Information Administration (EIA), Norway is the largest oil producer and exporter in Western Europe. The oil and gas sector makes up around 22% of Norwegian GDP and 67% of Norwegian exports.
Canada – iShares MSCI Canada ETF ( EWC Quick Quote EWC - Free Report)
Canada is also among the world’s top 10 oil producers. The oil, gas and mining sector makes up about over a quarter of Canada’s economy. The country is one of the world's largest producers of dry natural gas.
ETFs to Lose India – iShares India 50 ETF ( INDY Quick Quote INDY - Free Report)
India is almost entirely dependent on imports to back its oil needs. An oil price rally could thus be a major deterrent to India investing.
Turkey – iShares MSCI Turkey ETF ( TUR Quick Quote TUR - Free Report)
Normally, Turkey’s 90% of the crude requirements are satisfied by imports. The country is also suffering from higher inflation.