Breaking: Oil Prices Jump as OPEC+ Agree Oil Production Increase
Crude Oil Price Analysis & News
- Oil Prices up 2% on OPEC+ production deal, according to sources
- Proposal to Boost Oil Production by 400kbpd/month vs 500kbpd expected
OPEC+ will convene today for the 181st OPEC meeting as well as the 18th OPEC and non-OPEC ministerial meeting. The focus will be on setting production quotas going forward from August, while there is a possibility that OPEC+ make a mention on whether to extend production cuts beyond April 2022.
At the time of writing, OPEC sources have stated that there is a proposal for a modest increase in oil production of 2mbpd between August and December, with the monthly figure at 400kbpd. In reaction to the source reports, oil prices rose to session highs with Brent crude futures nearing $76/bbl.
This proposal is slightly less than the market consensus, which had been for 500kbpd from August. Keep in mind, that with demand projected to outstrip supply by circa 1.9mbpd, the oil market is still likely to remain tight with recent Iran Nuclear talks on pause and thus extending the time before Iranian oil comes back online. In turn, this keeps risks tilted to the upside, raising the likelihood of oil prices reaching $80/bbl.
Heading into the meeting, Russia had once again vocalised their desire to boost oil production, preferring to increase supply around 500kbpd-1mbpd, while Saudi Arabia’s Energy Minister continues to go down the path of remaining cautious in raising production with the spread of Covid variants remaining a concern. However, in light of these sources, it would appear that Russia has sided with the cautious approach.
That being said, during OPEC decisions days, it is not uncommon for a plethora of source reports to do the rounds across newswires as well as on social media with #OOTT on Twitter being the primary location for oil commentary. Therefore, it will be important to follow OPEC watchers on Twitter, such as Amena Bakr and Javier Blas who are invaluable during these OPEC meetings.
- OPEC ministers gather at 1200BST
- OPEC+ JMMC meeting is at 1430BST
- OPEC+ ministers gather at 1600BST
Brent Crude Oil Chart: Intra-Day
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.