The so-called OPEC+ coalition of oil-producing nations lead by Saudi Arabia and Russia is “expecting world oil markets to get acutely tight” in 2021, a year after taking the unprecedented steps of slashing production in the face of weak demand created by the Coronavirus pandemic, Bloomberg reports.
OPEC+ “believes the glut created when the coronavirus pandemic crushed businesses and fuel demand has nearly gone, and that oil stockpiles will diminish rapidly in the second half of the year as lockdowns ease and travel picks up,” according to the report.
“That leaves the Organization of Petroleum Exporting Countries and its partners with a decision to start pondering on Tuesday: whether to pump more oil or hold back while the outlook is still so mired in uncertainty.”
Meanwhile, oil exporter Saudi Arabia is expected to slightly increase its July official selling prices (OSPs) of light crude for Asia, “as margin weakness and demand uncertainty cap the upside despite stronger crude benchmarks,” a Reuters survey showed. The survey polled sources at five Asian refiners, which said on average they expected the July OSP for Saudi flagship grade Arab Light “to rise by 10 cents a barrel, with their forecasts ranging between no change to an increase of up to 20 cents.”
As OPEC+ ponders its decision on supply, U.S. crude futures climbed to the highest in more than two-and-a-half years, a separate Bloomberg report said. West Texas Intermediate rose as much as 3.2% from Friday’s close to $68.42 a barrel, while global benchmark Brent topped $70.
Under an agreement reached in April, OPEC+ said it would add 350,000 barrels per day in June and 441,000 barrels of production per day in July.
