OPEC+ likely to extend output cut in June

Logo of OPEC+

Energy ministers from the Organization of the Petroleum Exporting Countries and allies (OPEC+) will meet in early June to review production allocations as the group is likely to extend production cuts for another three months, Reuters reported.

The report stated that crude stocks, futures prices, and calendar spreads are all at similar levels to a year ago, making a significant rise in output unlikely.

OPEC+ may decide it needs to rescind some of the production cuts it implemented over the past year to pre-empt any possible increase by the United States, Canada, or Brazil and avoid conceding more market share, but current circumstances may limit this in light of tightening market conditions and rising prices.

The news agency pointed out that the average futures price for standard Brent crude oil reached $84 per barrel since the beginning of May, in line with the average price since the start of the century after adjusting for inflation.

Meanwhile, prices are high by only $6, or 7%, compared to their levels a year ago, when the group was planning to reduce production in order to support prices, according to the report.