BAKU, Azerbaijan, June 2
By Leman Zeynalova – Trend:
No additional tapering of oil production cuts is expected by OPEC+ later this year, Trend reports with reference to Capital Economics, a UK-based research and development company.
“As widely expected, OPEC+ agreed at June 1 meeting to keep to its existing plan of raising oil production quotas by 440,000 bpd in July. However, the group remains cautiously positive on the outlook for both economic activity and product demand in the second half of this year and, even though they are set to hold supply at the July 2021 level until April 2022, we suspect that there will be some additional tapering of production cuts later this year. Nonetheless, we expect that the global oil market will remain in a sizeable deficit in the near term, thereby supporting prices,” the company said.
Capital Economics believes that with demand in the US and Europe set to continue to recover strongly in tandem with the progressive easing of lockdowns, it was no real surprise that the group quickly agreed to continue with its slow phasing out of production cuts.
“Meanwhile, the group didn’t discuss the prospect of considerably more supply coming on stream from sanction-hit Iran. The Iranian minister was reportedly quiet during this meeting, but we anticipate that Iran’s production levels will be a contentious topic at future meetings,” said the company.
OPEC Secretary General Mohammad Sanusi Barkindo said before the meeting that the cartel anticipates that the expected return of Iranian production and exports to the global market will occur in an orderly and transparent fashion, thereby maintaining the relative stability.
Barkindo also emphasised the importance of investment for the future of oil, stating that it is “the lifeblood of this industry.”
The price of Brent is now above $70 per barrel for the first time since May 2019. ‘We think that the price of Brent (WTI) will peak at $75 ($72) per barrel in Q3 later this year as the market remains in a deficit, but that prices will ease back thereafter as global supply rebounds faster than global demand.”
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