Oil up slightly ahead of Opec+ meeting

Pétrole_Russie

Oil was trending slightly higher ahead of Thursday’s meeting of the Opec+ oil exporting countries. This comes against a backdrop of strong demand and threats to supply in several producing countries.

By 10:30 GMT (12:30 in Paris), a barrel of Brent North Sea crude for August delivery was up some 0.17% to $118.18. The barrel of U.S. West Texas Intermediate (WTI) for delivery in the same month was up 0.36% to 112.17 dollars.

“Demand is holding up well as we approach the peak of the summer season” with lots of travel, says Stephen Brennock, an analyst for PVM Energy. “At the same time, the short-term supply outlook is marked by a shortage,” he continues.

The 23 members of Opec+ (the Organization of the Petroleum Exporting Countries and its allies) are meeting on Thursday by video conference, to decide on a
further adjustment of their total volume of black gold production. Analysts expect a status quo despite numerous calls for action.

Opec+ spare capacity reported this week as much lower than expected, reinforcing concerns about
the offer,” says Stephen Brennock.

The state of production capacity in some Opec+ countries

The United Arab Emirates assured that they were at the maximum of their capacities. Saudi Arabia has argued that it can only pump 150,000 more barrels per day, French President Emmanuel Macron reported earlier this week.

Saudi Arabia and the United Arab Emirates are indeed the two Opec+ members perceived to have the most spare production capacity.

“If this turns out to be accurate, it means that Opec oil production in July and August will not increase further, despite the recent agreement to pump more crude than expected,” the analyst points out.

At the same time, oil production in Libya, another member of the alliance, is suffering from tensions between the two rival governments. Several oil fields are closing down in the east of the country.

In Ecuador too, the spectre of a halt to oil production is becoming clearer. This comes in the wake of blockades and demonstrations initiated by a movement against the rising cost of living.

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