OPEC+ is likely to stick to the existing pace of gradually easing oil supply curbs at a meeting on Tuesday, five OPEC sources said, as producers balance expectations of a recovery in demand against a possible increase in Iranian supply.
The Organization of the Petroleum Exporting Countries and allies – known collectively as OPEC+ – decided in April to return 2.1 million barrels per day (bpd) of supply to the market from May to July as it anticipated demand would rise despite high numbers of coronavirus cases in India. read more
Since that decision, oil has extended its rally and has now gained more than 30% this year, although the prospect of more output from Iran, as talks on reviving its nuclear deal make progress, has limited the upside for oil prices.
Brent crude hit $71 a barrel, its highest since March, on Tuesday.
OPEC Secretary General Mohammad Barkindo said he did not expect higher Iranian supply to cause problems.
“We anticipate that the expected return of Iranian production and exports to the global market will occur in an orderly and transparent fashion,” he said in a statement.
A panel of OPEC+ ministers called the Joint Ministerial Monitoring Committee has now started its meeting, an OPEC source said. The full ministerial session was due to start at 1230 GMT.
OPEC+ experts confirmed earlier forecasts for a sizeable, 6 million bpd jump in oil demand in 2021 as the world recovers from the COVID-19 pandemic, OPEC+ sources said.
They said they do not expect OPEC+ to decide on output policy beyond July, since the outlook for Iranian supply is not clear. OPEC has another meeting planned for June 24.
“It is likely that OPEC+ will stick for now with the increases in June and July rather than already planning any further production hikes from August,” said analyst Eugen Weinberg of Commerzbank.
“However, an increasingly tight market could make it necessary to review the agreement at short notice.”
OPEC+ cut output by a record 9.7 million bpd last year as demand collapsed. As of July, the curbs will stand at 5.8 million bpd.
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