OPEC cuts likely to be about global oil picture, says analyst

OPEC will reduce oil production by 2 million barrels per day due to looming demand concerns and the ongoing friction between the West and Russia over the war in Ukraine.

One oil analyst says that the output cut, the largest since the start of the epidemic, appears to be about the global oil picture as well as politics.

Bob Iaccino, Chief Market Strategist at Path Trading Partners, told Yahoo Finance Live that "I think with OPEC you're generally getting both," said Bob Iaccino, chief market strategist at Path Trading Partners.

He said that this appears to be a crack in the relationship between the US and Saudi Arabia. That is very discouraging in terms of the inflation picture in the midterms. Russian energy minister Pavel Sorokin was present at the OPEC meeting, which was the first in-person encounter since the start of the epidemic.

Demand concerns over the on- and-off Chinese lock-down and recession fears are among the reasons why output cuts are expected to keep a floor on the price of oil.

When you look at where crude oil is going, I still think it's going to be weak. Iaccino said when you look at demand, given the potential recessionary picture globally, demand is going to fall off a cliff.

It is the price that is going to be controlled by the OPEC. If we get the global recessions predicted, you're going to get a continued fall in demand, because this particular cut is going to last all the way into December 2023, he predicted.

I think OPEC wants $100 barrel crude oil. He said that we still think we're going to see $65 before we see $100 in the WTI crude oil market.

On Wednesday, West Texas Intermediate crude CL F was trading more than 1% higher. Brent crude BZ F was more than 1% higher.