At this week's ministerial meeting, OPEC+ countries unanimously agreed to maintain the current official production quotas unchanged, while market attention turned to a subgroup composed of eight member countries, including Saudi Arabia and Russia. These countries had previously implemented voluntary additional production cuts and plan to gradually restore some production over the coming months.
According to the meeting announcement, the entire OPEC+ alliance will continue to uphold a formal agreement to maintain a policy of reducing production by about 2 million barrels per day until the end of 2026, supplemented by two informal voluntary reduction mechanisms. Currently, the eight countries—Saudi Arabia, Russia, UAE, Iraq, Algeria, Kazakhstan, Kuwait, and Oman—are voluntarily cutting an additional 1.66 million barrels per day until the end of next year.
Furthermore, this subgroup implemented another plan for a daily reduction of 2.2 million barrels by the end of March but has started to gradually cancel it over the following months. As per the latest arrangements, these countries will collectively restore a capacity of 1 million barrels per day from April to June and will assess over the weekend whether to further increase production in July.
Possible Production Increase in July Exceeding 400,000 Barrels Per Day
According to unnamed OPEC+ representatives, the subgroup might continue to increase production in July, with one representative suggesting it could reach 411,000 barrels per day, equivalent to the increases in May and June. This pace of increase reflects OPEC+'s dynamic strategy to flexibly respond to changes in supply and demand.
OPEC+ energy ministers also called on the OPEC Secretariat during the meeting to evaluate the sustainable capacity of each country, aiming to set more precise baseline production levels for 2027. This figure will directly impact the allocation of quotas in future production cut agreements among member countries.
UAE Energy Minister Mazrouei pointed out, "The group is doing its utmost, but these eight countries alone are not sufficient; we need the collaboration of all members."
Market Reaction: Oil Prices Rise as Demand Outlook Strengthens
On the day the OPEC+ meeting concluded, international oil prices rebounded. The July contract for London Brent crude closed up 81 cents, at $64.90 per barrel, a rise of 1.26%; New York WTI July crude futures closed up 95 cents, at $61.84 per barrel, an increase of 1.56%.
Analysts believe the rebound in oil prices is supported not only by changes on the supply side but also by the approaching peak summer demand season. The start of the travel season and increased demand for air-conditioning electricity in Middle Eastern countries typically lead to a significant increase in oil consumption.
UBS strategist Giovanni Staunovo stated, "In the first quarter, the oil market was actually balanced in terms of supply and demand, contrary to prior forecasts of oversupply. With more data being released, we anticipate further adjustments to forecasts."
He expects that with seasonal demand rising and OPEC+ production increases returning to the market, oil prices may stabilize in the $60 to $70 per barrel range over the coming months.
