OPEC+ signals changes in oil production
The oil cartel OPEC+ announced plans to increase oil production by 188 thousand barrels per day in June.
For comparison, the increase in May will be 206 thousand barrels per day.
The decision was made during the May 3 meeting with representatives from Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman.
It was the first session after the United Arab Emirates left OPEC structures on May 1.
We wrote more about this in the article: Shock in the oil market. UAE leaves OPEC and OPEC+. Reuters warns of “chaos”
“Countries will continue to monitor and assess the market situation closely, and as part of ongoing efforts to support market stability they confirmed the importance of maintaining a cautious approach and full flexibility in increasing, suspending or reversing voluntary production adjustments, including reversing previously announced voluntary adjustments in November 2023,” the official statement said.
Analysts from ING Think say it is “unlikely” that OPEC+ plans will be implemented because “55% of that increase is expected to come from Gulf producers.”
“It will not be possible in the face of ongoing disruptions in the Strait of Hormuz,” they added.
The complicated situation in the Middle East continues to keep oil prices above $100 per barrel.
“Iran reported that it received a response from the United States to its latest peace plan proposal. However, there are suggestions that President Donald Trump has deemed the proposal unacceptable. If that is the case, the market remains in a state of suspension,” the bank said.
“Trump also announced plans to escort commercial vessels from the Persian Gulf through the Strait of Hormuz. The announcement caused a brief drop in oil prices, but the market has already recovered those losses,” he added.
The next Group meeting is scheduled for June 7.
Source: Organization of the Petroleum Exporting Countries (OPEC).
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Oil prices remain above $100 per barrel
The Brent futures contract price on Monday, May 4 is at 109,4 USD per barrel (+1.15%).
The commodity price fluctuates significantly in response to Middle East news and updates on the U.S. and Iran peace process taking place in Pakistan.
The main market concern remains the blockade of the Strait of Hormuz, which has disrupted flow through the key transport route for global oil and gas supplies since the conflict began.
Chart. Brent futures contract price
Source: Trading Economics.
The WTI futures contract price reaches 102,7 USD (+0.8%).
Chart. WTI (West Texas Intermediate) futures contract price
Source: Trading Economics.
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Source: OPEC, ING Think.
