OPEC+ deal extension will push Brent prices to $70: survey

The extension of an oil production cut deal by OPEC+ will push Brent crude prices to $70 a barrel, according to 66 percent of those polled in Gulf Intelligence’s latest monthly survey.

At its meeting in Vienna in late June, OPEC, with Russia’s backing, announced it would be extending its existing output cut deal for a further nine months to March 2020. The pact will remove of 1.2 million barrels per day (mbd) from the market.

On the policy front, 63 percent of respondents said Saudi Arabia had greater influence than Russia on OPEC and non-OPEC’s (also known as OPEC+) supply policy.

Prices have averaged $63.92/bbl during July, similar to the range witnessed during the first quarter of this year.

Brent prices hit the low $70s for a brief period during April but then fell below $70 a barrel for the remainder of the second quarter. This was despite the re-imposition of US sanctions on Iranian oil exports and heightened geopolitical tensions in the Gulf.

Weaker global economic growth forecasts and the ongoing trade spat between China and the US are seen to be dampening demand sentiment. 
 

Nearly 77 percent of the respondents said that increases in shale oil production – notably from the US – would continue to undermine the OPEC+ group’s efforts to reduce global inventories.

Last month, the International Energy Agency (IEA) said that OECD commercial stocks increased in May to 6.7 million barrels above the five-year average and that a global surplus of 0.5 mbd was registered in the second quarter.

Meanwhile, 70 percent of respondents believed that the tanker standoff since early July in the Strait of Hormuz will likely get worse before it gets better.