Markets Expect More of the Same from OPEC+ Summit

Markets await the outcome of today’s meeting for members of the Organization of the Petroleum Exporting Countries (OPEC) and other major producers forming an alliance known as OPEC+.

The summit comes more than a year after the first wave of the Coronavirus pandemic that caused a shock in the international energy market and led to sharp decline in oil prices, which led to new output cuts by OPEC+.

But now, the OPEC+ alliance is working on gradually easing the products curbs, as the global economy is showing recovery signs faster than previously expected.

The dominant sentiment is that the worst is behind and that restoring the oil market stability is near, according to recent media reports.

OPEC+ producers are set to decide on their production policy for July, with expectations leaning towards maintaining the current policy adaptation.

Some have suggested that although restoring pre-pandemic prices have provided support for crude producers, but high oil prices might also be a burden on the global economy, which might encourage the alliance to more production during the second half of the year.

A ministerial meeting on Tuesday will likely approve maintaining the current gradual output rise.

According to the current policy, output will increase by 2 million barrels per day by next month, as it was agreed in April and began in May.

OPEC+ producers increased production by about 350,000 barrels per day in May, and are set for additional increases of 440,000 barrels a day in June and July.

OPEC’s latest monthly report showed that the organization has decided to maintain its forecast for global oil demand growth for 2021.

The global demand for oil this year is expected to grow by around 5.95 million barrels per day, according to OPEC.

Meanwhile, OPEC has lowered its forecast for global oil demand in the second quarter of 2021 by 300,000 barrels per day.

On the other hand, forecasts for Q3 and Q4 of the year were raised, amid signs that the second half of the year will see more recovery, as the organization previously expected.

OPEC also lowered its forecast for non-OPEC oil supply growth for 2021 by 230,000 barrels per day to 700,000 barrels per day, while its global demand for OPEC’s crude was raised by 200,000 barrels per day to 27.7 million barrels per day.