What is the Market Consensus for OPEC+ Meeting?
According to Rystad Energys oil markets analyst Louise Dickson, the market consensus is that OPEC+ will likely raise August production by about 500,000 barrels per day at its next meeting, which is scheduled to take place on July 1. Depending on the Delta variant developments, this would still be a net positive for oil prices as it doesnt fully satiate the swiftly growing demand profile over summer, Dickson highlighted. The oil markets analyst outlined that Rystad Energy believes OPEC+ should take an even more cautious approach, however, and only raise production by 100,000 to 200,000 barrels per day, month on month, in August, due to uncertainty over the Delta variant and a potential Iran deal. OPEC+ should be cautious but over-caution will lead to a continued oil price rally that on one hand will bring much needed dollars to many OPEC+ countries, but risks relinquishing market share outside the OPEC+ sphere of influence, Dickson said in a statement sent to Rigzone on Monday. OPEC+ prefers to stay behind the demand curve to provide more pricing flexibility and better plan for upstream developments, as well as leave some flexibility for the potential return of Iranian barrels, slipping compliance from Russia and Iraq, and a potential mini-surge from U.S. shale, the Rystad Energy analyst added. For the moment, it looks like the U.S. airstrikes against Iran-backed militias in Iraq and Syria over the weekend will likely pause any imminent U.S.-Iran nuclear deal talks, Dickson went on to say. In the statement sent to Rigzone, Dickson pointed out that oil prices were taking a hit over new setbacks that the Covid-19 pandemic is landing in Europe, Southeast Asia, and Australia. The forecast for oil demand recovery over the summer may be a bit overestimated and traders are facing a reality check this week as the Delta variant reached Europe and as an infections surge in Southeast Asia and Australia is bringing back lockdowns, Dickson said. The lifting of public health measures across Europe in June may need to be walked back in order to fight the new highly contagious spread of the new variant, Dickson added. We could see a flurry of travel restrictions reinstated in Europe as a result of the Delta variants spread, which would weigh on gasoline, diesel, and jet fuel demand, and prices will take notice, the Rystad representative continued. At the time of writing, the price of Brent crude oil stood at $73.98 per barrel. To contact the author, email andreas.exarheas@rigzone.com