London — The Organization of the Petroleum Exporting Countries and allies decided in April to return 2.1 million barrels per day (bpd) of supply to the market from May to July, as it anticipated global demand would rise despite surging coronavirus cases in India.
Oil has extended this year’s rally since the decision and has gained over 30% in 2021 to $68 a barrel. Still, the prospect of higher Iranian output as talks make progress on reviving its nuclear deal with world powers has limited the upside.
Two OPEC+ sources, speaking on condition of anonymity, said there were no talks on amending the oil output-cut levels for July, while two more said the producers should stick to their existing series of gradual output increases.
“Not to relax more on production cuts is a wise decision to be taken, in my opinion,” one of the OPEC+ sources said.
Still, the prospect of higher Iranian supply cannot be ignored, another OPEC+ source said, asked about discussions of a return of Iranian barrels.
Talks in Vienna between world powers and Iran on reviving the nuclear deal have been under way since April, and oil industry sources say Iranian oil exports have been rising since late 2020.
A sharp slowdown in demand could hinder the plans of OPEC+, but for now OPEC expects a 6 million bpd jump in world oil demand in 2021 focused on the second half. [OPEC/M]
OPEC+ cut output by a record 9.7 million bpd last year as demand collapsed, of which the bulk remains in place. As of July, the OPEC+ curbs will stand at 5.8 million bpd.
*Alex Lawler & Ahmad Ghaddar, Editing: Barbara Lewis – Reuters