Oil Prices Seek Direction In Advance of OPEC Meeting on Thursday

OPEC’s forecasts point to an oil supply deficit in August and in the rest of 2021 as economies recover from the pandemic, suggesting the group and its allies have room to raise output at a meeting this week. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, is returning 2.1 million barrels per day (bpd), about 2% of world output, to the market from May through July as part of a plan to ease last year’s record output curbs. OPEC+ meets on Thursday to discuss supply for later months. With oil at its highest since 2018, sources say a further boost in August will be discussed, but some producers are wary about new demand setbacks and higher Iranian supply. OPEC’s latest forecast of the demand for its crude suggests, if output levels stay the same, OPEC supply will fall short of expected demand by 1.5 million bpd in August. The shortfall widens to 2.2 million bpd in the fourth quarter.

The above graphic is based on the assumption that the 10 OPEC members with quotas keep pumping at agreed July levels and Iran and other exempt producers stick to May’s production – the latest month for which OPEC figures are available. Also included in the graphic is OPEC’s own figure for the first quarter showing a 280,000 bpd deficit. Iran and world powers have been talking since April on reviving Tehran’s 2015 nuclear deal, which would allow Iran to boost output, so far without agreement.

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Source: Reuters