OPEC+ Increases Oil Production Faster Than Expected
OPEC+ surprised markets by deciding to boost oil output by 548,000 barrels per day in August, surpassing earlier predictions. This move aims to capitalize on high summer demand and regain market share. While Saudi Arabia leads the push for increased production, Kazakhstan is exceeding its OPEC+ quota due to Chevron's Tengiz field expansion. Despite global oil price pressures, OPEC+ remains optimistic about strong summer demand absorbing the surplus.
OPEC+ will increase oil production more than expected in August to capture market share amid peak summer demand. At a virtual meeting, core members led by Saudi Arabia agreed to add 548,000 barrels per day (bpd) to global supply, exceeding earlier expectations. This move accelerates the rollback of 2023 voluntary supply cuts, aiming to fully unwind prior cuts nearly a year ahead of schedule.
The decision reflects bullish fundamentals with low inventories and strong refining margins. U.S. refiners are processing the most crude since 2019. The shift signals a move from price defense to volume maximization, as noted by Onyx Capital's Harry Tchilinguirian.
While Saudi Arabia emphasizes discipline, Kazakhstan's crude output surged in June, surpassing its OPEC+ quota. Chevron's expansion of the Tengiz mega-field drove this increase. Despite pledges of compliance, Kazakhstan struggles to enforce cuts on foreign-led projects like Tengiz or Kashagan.
Oil prices are under pressure, with Brent futures down over 6% year-to-date. Global inventories have been rising, and analysts warn of potential price dips in Q4. OPEC+ hopes strong summer demand will absorb the new supply, but challenges loom as Kazakhstan pumps freely and Saudi Arabia focuses on volume.
According to the source: Crude Oil Prices Today | OilPrice.com.
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