OPEC+ may continue to increase production: News says it may triple the original planned production capacity in July

Source: Cailianshe

This week, crude oil prices partially fell as the U.S. Energy Information Administration reported a comprehensive increase in crude oil inventories, coupled with the U.S. and Iran expected to quickly advance nuclear negotiations and release Iran's oil production capacity.

However, at the OPEC+ meeting in early June, representatives of member states may make a decision to increase oil production in July, which will be the third consecutive increase this year, according to sources.

It is reported that the scale of this increase in production may be 411,000 barrels per day, three times the initial plan. However, this plan is still under discussion and the representatives of member states have not yet made a formal decision.

However, this news is obviously not consistent with OPEC+'s efforts to defend the oil market price wall. Some people also pointed out that continuing to increase production and suppress oil prices is because OPEC+ wants to suppress overproduction member states to regain market share, and on the other hand, it is to show goodwill to US President Trump.

Pessimistic view

Saudi Arabia has warned of overproduction in member states such as Kazakhstan and Iraq, but so far these countries still have only verbal commitments and have not put them into practice. This may be one reason Saudi Arabia wants to continue to push for increased production.

On the other hand, as Saudi Arabia, the UAE and Qatar reached a multi-billion-dollar investment agreement with US President Trump who visited the Middle East not long ago, these three countries that hold an important share of the OPEC+ organization may also hope to further show goodwill to the US government and cooperate to continue to lower oil prices.

The market is currently pessimistic about crude oil prices. In addition to increasing production, whether demand can recover has always been a key issue for analysts to worry about. This is also highly correlated with Trump's trade policy, and analysts are closely monitoring the suppression effect of tariffs on global economic growth to judge whether crude oil can see a rebound in demand in the coming days.

However, according to Nissan Securities analyst Hiroyuki Kikukawa, who told the media, there is limited room for further declines in oil prices this month given the upcoming U.S. Memorial Day will kick off the summer travel season, driving demand for U.S. driving a surge in U.S. driving.

In addition, geopolitical factors will continue to disrupt the market. According to reports, if the U.S. negotiations with Iran fail, Israel may attack Iran quickly. In Africa, according to a government letter, the Sudanese military is preparing to close the Port of Sudan due to internal conflicts, which is the most important channel for neighboring South Sudan to export oil.

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