Opec+ will examine production quotas before making a crucial July output decision
Opec+ is set to convene online on Wednesday to assess production quotas for the current year and the next. Subsequently, eight key members will deliberate over the weekend on the potential increase of output in July. Numerous delegates indicated their anticipation that the Organization of the Petroleum Exporting Countries and its allies will maintain their long-term objectives for 2025 and 2026, which are fundamental to the existing supply constraints, without alteration. The ongoing deliberations regarding the continuation of their 411,000 barrel-a-day increases, which have contributed to a significant decline in prices over the past two months, are set to be concluded in a video conference on Saturday, according to delegates who requested anonymity due to the confidential nature of the discussions.
Opec+ has reached a consensus to expedite the increase in oil production for June, notwithstanding the prevailing weak demand.
The arrangement of the meetings highlights the diminishing significance of oil quotas for the entire 22-nation Opec+ coalition over the last two years, as real supply modifications are executed by a subgroup of eight nations, spearheaded by Saudi Arabia and Russia. On April 3, these nations disrupted market expectations by announcing a super-sized hike — three times the volume that was initially planned. The unexpected decision, revealed shortly after President Donald Trump initiated a global trade conflict, contributed to a decline in crude futures, which fell to a four-year low beneath $60 a barrel in the following days, signifying a departure from years of attempts by the coalition to stabilize prices.
Brent contracts have stabilized around $65 following Trump’s reversal of certain trade tariffs. Opec+ delegates have provided various justifications for the policy reversal: addressing summer fuel demand, penalizing over-producing members, appeasing President Trump, and recovering lost market share. In principle, Wednesday’s assembly may provide the Saudis with the chance to advance these final two aims. As the eight countries progress in their efforts to restore approximately 2.2 million barrels of output that were suspended since 2023, they are currently just over halfway through this endeavor. Should they sustain their current accelerated rate of increases, the completion of this restoration process is anticipated by October.
If Opec+ were fully committed to regaining market share, it could propose altering those underlying output quotas during the discussion on Wednesday. Saudi Energy Minister Prince Abdulaziz bin Salman has established a reputation for delivering unexpected developments at the eleventh hour; however, delegates have reported no signs that such actions are currently planned. The initial gathering on Wednesday involves the Joint Ministerial Monitoring Committee, which includes a subset of Opec+ members tasked with assessing the current state of the oil market. A subsequent assembly of the complete 22-nation Opec+ coalition is anticipated. Finally, the 12 core Opec members will convene for one of their two mandatory annual assessments, which are typically characterized by their administrative nature.
