Oil prices rallied ahead of and during the monthly meeting of OPEC+ early on Tuesday after the alliance’s Joint Ministerial Monitoring Committee (JMMC) signaled there would be no changes in the plans to boost July oil production by 840,000 barrels per day (bpd).
As of 9:05 a.m. EDT on Tuesday, WTI Crude was up by 3.36 percent at $68.61, and Brent Crude was trading above $71 per barrel after breaching the $70 mark earlier today. Brent was up 2.55 percent at $71.14.
The meeting of the JMMC also signaled that OPEC and OPEC+ see the global oil market in a better place than earlier this year and that the group is carefully monitoring the ongoing talks about the Iran nuclear deal that could soon result in Iran’s oil legitimately returning to the market.
“The projections for oil are largely unchanged from our last meeting, with demand expected to grow by 6 mb/d to around 96.5 mb/d on average for the year, an increase of 6.6%. As with the economy, the market outlook for later this year looks especially promising,” OPEC Secretary General Mohammad Barkindo said at the JMMC meeting, which preceded the full OPEC+ meeting.
“In fact, we anticipate that demand will surpass 99 mb/d in the fourth quarter, which would put us back in the range of pre-pandemic levels,” Barkindo added.
This suggests that despite the still high COVID uncertainty, especially in parts of Asia such as India, OPEC, and the OPEC+ group, expect the market to accommodate further increases in production, as well as a return of Iranian barrels.
“We anticipate that the expected return of Iranian production and exports will occur in an orderly and transparent fashion, thereby maintaining the relative stability that we have worked hard to achieve since April of last year,” Barkindo said.
Russian Deputy Prime Minister Alexander Novak, who co-chairs the JMMC, highlighted the recent improvements in the global oil market, but noted that “some risk factors” persist.
The full OPEC+ meeting was starting at the time of writing.
“There will probably be nothing to revise,” OPEC sources told Russian news agency TASS.
By Tsvetana Paraskova for Oilprice.com
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Brent crude could surge to $70-$80 a barrel much earlier than my earlier projection that it will happen in the third quarter of this year. Moreover, global oil demand will return to pre-pandemic level of 101 million barrels a day (mbd) by the middle of this year.
Therefore, OPEC+ will see no need to change its current output plans. Furthermore, it shouldn’t worry about a lifting of US sanctions on Iran.
A lifting of US sanctions on Iran may not see the light of day even by 2023 or ever. The reason is that the positions of the United States and Iran are irreconcilable.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London