OPEC+ to hold June 2 output policy meeting online

The meeting of the OPEC+ coalition which was supposed to take place on June 1, has been delayed by a day and the participants will be adopting a virtual meeting now. OPEC+ is the abbreviated name of the association of the Petroleum Exporting Countries and some other countries led by Russia.

The core of the discussion remains the further course of oil production policies as the coalition is faced with the task to work out the delicate nuances of the processes of supply and demand within the framework of the global oil market. Now, the voluntary cuts by OPEC+ members amount to reducing the output of crude by around 2.2 million barrels per day (bpd) for the first half of 2024. These endeavours have been steered by countries such as Saudi Arabia that stuck to previous voluntary reductions which have played a crucial role in the further tentative decrease in output.

The current era restrictions are on top of prior cuts amounting to 3.66 million barrels per day, which is expected to continue up to the end of the third quarter of 2024. Altogether, these measures come up to the equivalent of 5.86 million bpd, equal to about 5.7% of daily world demand, based on calculations by consultants at Reuters.

The decision to extend the output cut is setting in at a time when the output from the ex-emerging economies that are non-members of the cartel especially United State has been increasing, further fueling fears of supply overhang. However, concerns over demand persist as core countries face high-interest rate environments, which poses challenges to oil markets.

As portrayed by these volatilities, the Brent crude that is used as the international reference changed just slightly, by a negative 0.3% on Friday at $81.14 a barrell. This was the weakest point since February according to the data on 2011. This retreat comes after Brent oil price hit an early April high of USD 91.17 early last month. In relation to this, the current global oil prices of approximately 17 per barrel indicate that the present day oil markets are volatile and sensitive.