Unlike Russia and Oman, Algeria wasn’t initially in favor of a pause in the OPEC+ oil production increases at this weekend’s meeting, Bachar El-Halabi, senior correspondent at Argus Media, reports, citing a senior source within the OPEC+ group.
Initially, Russia and Oman – two non-OPEC producers part of the OPEC+ alliance implementing the cuts since 2022 – requested a pause in the monthly production increases, Argus Media has reported.
But OPEC member Algeria didn’t call for a pause, according to Argus’s source.
“Algeria raised the issue of lack of compensation and conformity [of certain members] during the meeting,” the source told Argus.
Algeria aligned with the consensus for another 411,000 barrels per day output hike in July.
Oman and Russia first said they were in favor of a pause, but later also aligned with the consensus, according to Argus.
Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman said on Saturday they would boost July production by another 411,000 bpd, citing “current healthy oil market fundamentals and steady global economic outlook.”
OPEC+ never discussed boosting production for July by more than 411,000 bpd, Argus’s source said, referring to last week’s reports that the group could be considering a super-hike for next month.
Despite the continued unwinding of the OPEC+ cuts, oil prices rallied by 4% early on Monday, as the group didn’t opt for an even larger increase and as portfolio managers were forced into short covering.
The price rally was driven by geopolitical tensions and strengthened by short covering after hedge funds were caught holding one of the largest gross short positions in WTI and Brent futures in the past five years, Saxo Bank analysts said in a note on Tuesday.
Currently, the spot oil market is still relatively tight and demand is set to pick up into the summer months, suggesting prices are likely to remain relatively well supported, ING strategists Warren Patterson and Ewa Manthey said today.
“However, the market is likely to shift into a large surplus from the fourth quarter onwards. This should put renewed downward pressure on oil prices later in the year,” the ING experts noted.
By Charles Kennedy for Oilprice.com
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