The OPEC+ group is expected to rubberstamp next week its moderate monthly increases in oil production when it decides output levels for July, six sources at OPEC+ told Reuters on Thursday.
OPEC+, led by Saudi Arabia and Russia, has not changed course since it decided last year to gradually return supply to the market, and raise production by around 400,000 barrels per day (bpd) every month until it unwinds all the 10 million bpd cuts announced in April 2020 at the peak COVID lockdowns globally.
The alliance has been sticking to modest production rises even after oil prices spiked to more than $100 per barrel after a key member of the pact, Russia, invaded Ukraine. The group says that it sees the market as a balanced one, and price surges are the result of the “geopolitical situation.”
In early May, OPEC+ agreed to leave its production plan unchanged, aiming to boost crude oil production in June by 432,000 bpd, in a move widely expected by the market. This was the third OPEC+ meeting since the Russian invasion of Ukraine. For a third consecutive month, OPEC’s press release on another record short meeting read that, “It was noted that continuing oil market fundamentals and the consensus on the outlook pointed to a balanced market.”
The alliance has resisted calls from major oil importers to do more to lower the high oil prices.
Commenting on the calls to boost supply more than planned, Saudi Foreign Minister, Prince Faisal bin Farhan, said in Davos this week that “It’s much more complex than just bringing barrels to the market.”
“Our assessment is that actually oil supply right now is relatively in balance,” the minister added, as carried by Bloomberg.
Commenting on the upcoming meeting on June 2, one source told Reuters: “Why change what works perfectly?”
“We will announce that we are going to increase our production by 432,000 bpd even if we are no longer able to do so,” the source added.
While OPEC+ is sticking to its policy of modest monthly increases, many of its members are not pumping to their quotas and the group overall is estimated to be around 2.5 million bpd below its quota.