Looking at OPEC+ market share, increasing oil output even higher
Saudi Arabia, Russia and six other key members of the OPEC+ Alliance on Saturday said they would further increase oil production in August to 548,000 barrels per day.
Analysts were hoping that the alliance would determine another output increase of 411,000 bpd. This is the same target approved in May, June and July.
In a statement, the group said “the basis of a stable global economic outlook and the current healthy market as reflected in low oil inventory” led to the decision to hike the output further.
“OPEC+ continues to surprise the market. This latest hike is even bigger than expected and sends a clear message for those who are still suspicious,” Rystad Energy’s Jorge Leon told AFP.
“Two big questions are on the market right now. First, if 2.2 million barrels of volunteer cuts per day are unlocked, will OPEC+ target the next group of 1.66 million barrels?
“There’s a comfortable price of over $60 and a geopolitical background of turbulence. Especially given the fragile ceasefire in the Middle East, the answer to both questions may be “yes” given the broader risks in Ukraine and Libya. ”
“The fact that Kazakhstan and Iraq still overproducing higher quotas is a factor supporting the cut unwind decision,” UBS analyst Giovanni Staunovo said on Saturday.
The meeting takes place after a 12-day conflict between Iran and Israel. Israel temporarily sent prices above $80 per barrel amid concerns about the possibility of closure of the Strait of Hormuz, a chalk that accounts for about a fifth of the world’s oil supply.
The broader OPEC+ group – made up of 12 national organizations of the Petroleum Exporting Countries (OPEC) and its allies – began reducing power in 2022 to raise prices.
However, in a policy shift, eight Saudi-led alliance members shocked the market by announcing that they would significantly raise production and plunge oil prices from May.
Oil prices are hovering from low $65, between $65 and $70 per barrel.
By approving another production hike, heavyweight Saudi Arabia may try to put pressure on its members to not maintain the agreed quota by reducing expected oil profits due to low prices.
Estimates by Bloomberg showed that production at the Alliance increased by just 200,000 bpd in May, despite doubling the quota.