BAKU, Azerbaijan, June 10. OPEC+ has generally been content to stick by its initial plan of returning incremental production to market on a monthly basis, Trend reports with reference to Fitch Solutions.
“This will see the group’s concerted output remain capped through till September at least helping to ensure a level of tightness in the market, although subject to downside risks from supply additions from non-OPEC sources. The group is believed to be in discussions to exclude Russia from the production cut deal, which on paper would free up others in the group to produce more to make up for Russia’s shortfall, although this would depend on the varying amounts of spare capacities held in each member states, and the state of their respective crude oil sectors,” said the company.
Fitch Solutions’ report reveals that to date, the group has largely rebuffed global pressure from consumers to raise production at a faster rate, partly as most are benefitting from the windfall in profits due to rallying oil and gas prices, but also as some members have simply not been able to raise production to desired levels, due to natural declines and other logistics, operational issues.
“The demand side is more mixed, and to some degree, this helps to maintain the balance between bullish and bearish factors that are currently affecting Brent. The summer driving season in the US is seeing record surges in gasoline and diesel consumption, although comparable surges in pump prices, next to low stocks, point to a market vulnerable to supply disruption and concerns about a sharp drop-off in demand, once peak demand season fades.
European fuel demand is also due to see a stronger upward push from seasonal factors, although market remains tight as refiners are still struggling to raise runs, amid challenges to replacing Russian feedstock, and logistics issues stemming from mostly having to rely on crude barrels from farther locations, such as the US and Africa,” said the company.