OPEC+ Talks to Offer Clues on Next Phase of Oil Supply Revival - Bloomberg

OPEC+ Talks to Offer Clues on Next Phase of Oil Supply Revival - Bloomberg

For oil traders, the biggest question in the market is how fast OPEC and its allies will revive production later this year. Next week they may get some clues.

When it meets on Tuesday, delegates said the alliance led by Saudi Arabia and Russia looks set to rubber-stamp output increases scheduled for the next two months.

But more importantly, Riyadh and Moscow may offer insights on the next stage of their strategy: bringing back the millions of barrels a day that remain offline after being shuttered when the coronavirus struck.

In theory, there’s a yawning supply gap for the Organization of Petroleum Exporting Countries and its partners to fill in the second half of the year as economies open up and fuel demand soars. Yet the group will need to weigh that against the risk from renewed virus outbreaks in India and elsewhere, and the prospect of extra supply from fellow member Iran.

The pace of revival they ultimately choose will be critical for crude markets and the fortunes of producers around the world. It was OPEC’s intervention that ended last year’s oil-price crash and fostered their recovery to nearly $70 a barrel today.

“We’re still expecting OPEC+ to push through with the announced measures until the end of July,” said Bill Farren-Price, a director at research firm Enverus and veteran observer of the cartel. Beyond that “it remains a delicate balancing act. OPEC’s sense of caution is warranted.”