OPEC+ looked set to increase production in July as expected, as ministers prepare to tackle the thornier issue of how to handle a tightening oil market for the rest of the year.
The Joint Ministerial Monitoring Committee recommended pushing ahead with the increase for July, when the group stands to add 841,000 barrels per day following hikes in May and June, according to delegates. There’s been no discussion yet on Tuesday of policy beyond that. A full ministerial meeting starts shortly.
Oil demand is accelerating as vaccine programs expand and economies rebound -- and Brent soaring back above $71 is fueling inflation concerns. But the outlook for the cartel, which engineered the recovery in prices from the historic crash of last year, continues to be mired in uncertainty as the focus shifts to how it will manage an increasingly tight market for the rest of the year.
Iran’s potential return to international markets is one factor weighing on ministers’ decision-making. The impact of new variants of Covid-19 is another. And while there’s a wide deficit in the market to fill in the second half of the year, those two considerations could see some producers argue for a pause before further hikes.
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