The organization of Plus oil exporting countries (OPEP+) agreed to accelerate its oil production increases for the second consecutive month, confirming on Saturday that production will increase by 411,000 barrels per day in June, despite the recent price falls and the fears of weakening global demand.
The decision was arrived after an online meeting that lasted just over an hour, during which the group said: “The foundations of the oil market were healthy and the inventories were low.”
Oil prices have continued to slide, reaching a minimum of four years in April of less than $ 60 per barrel. The fall followed an increase in production larger than expected announced for May and a growing concern for the global economy due to tariffs imposed by the president of the United States, Donald Trump.
“We continue to call this a forwarding of 'managed' cuts and not a struggle for market share,” said Ubs Giovanni Staunovo analyst, who added that prices are expected to fall further on Monday in response to the last announcement of OPEC+ and ongoing commercial tensions.
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The last increase in production occurs when Saudi Arabia, a key controller within the OPEC+, presses a faster reversion of the cuts of previous results, according to the reports, with the aim of penalizing other members Iraq and Kazakhstan about the bad fulfillment of the agreed quotas.
“The fulfillment again seems to be the key approach, with Kazakhstan and Iraq continuing to lose its compensation goals, together with Russia to a lesser extent,” said Helima Croft of RBC Market Capital.
Kazakhstan has openly challenged the group's production strategy. His energy minister said this month that national interests will have priority over the OPEC+commitments. April's production of the country exceeded its share despite a 3% drop in general production.
The eight OPEC+ countries that currently implement the last exit cut of 2.2 million BPDs of the group had already gradually agreed in December.
As of April, they committed to monthly increases of approximately 138,000 BPD. With the last June walk, the combined increase for April, May and June will reach 960,000 BPD, approximately 44% of the total cut, according to Reuters.
Brent Crude Futures fell in more than 1% on Friday to $ 61.29 per barrel in forecast of the June increase.
Meanwhile, the sources told Reuters that Saudi officials have made clear the allies of the industry who are no longer prepared to underpin the market with additional supply cuts.
Continuous production settings also occur when Trump prepares to visit Saudi Arabia at the end of this month, after repeatedly urge the group to increase the supply.
After Saturday's session, Kuwait's Minister of Petroleum commented that the result of the OPEC+ meeting “would significantly affect the formulation of the production policy in the next period.”
OPEC+, which includes the organization of exporting countries and oil partners such as Russia, is still braking almost 5 million BPD under its broader agreement.
Many of these cuts will remain in place until the end of 2026. The group is expected to meet for a complete ministerial meeting on May 28.
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