OPEC+ set to make another accelerated oil output hike for August
If the increase is agreed, it would bring the total rise in supply from OPEC+ to 1.78 million bpd so far this year, equivalent to over one and a half per cent of total global demand.
The group has not yet increased production by the volumes agreed because some members are compensating for previous overproduction and others need longer to bring output back online.
The group has made a radical change in policy this year, after several years of output cuts totalling more than 5 million bpd.
This came when eight members started to unwind their most recent output cut of 2.2 million bpd starting in April and accelerated the production hikes in May, June and July, despite the extra supply weighing on crude prices.
The change came after some members, such as Kazakhstan, produced way over their targets, angering other members that were sticking more closely to agreed cuts.
OPEC and its allies including Russia, together known as OPEC+, are also seeking to win back market share during the period of cuts when rival producers such as the US boosted production.
Russian President Vladimir Putin said on Friday that OPEC+ projects rising global demand, especially in the summer, suggesting the group may continue with big output hikes.
The group of eight, which includes Saudi Arabia, Russia, Kuwait, Iraq, the United Arab Emirates, Kazakhstan, Oman and Algeria, will meet on July 6.
Analysts at Energy Aspects and Helima Croft at RBC Capital Markets expect an August hike of 411,000 bpd.
"We do think the group is most likely to still go ahead with the August accelerated unwinding," said Richard Bronze, head of geopolitics at Energy Aspects.
OPEC and authorities in Saudi Arabia did not immediately respond to requests for comment.
Two sources familiar with OPEC+ discussions who spoke on condition of anonymity said the group may discuss a more than 411,000 bpd increase for August, although it was not clear that all members supported such a move.
One complicating factor for the talks is the potential for more supply from Iran after the Israel-Iran ceasefire.
US President Donald Trump said on Wednesday that the US had not given up its maximum pressure on Iran, but signalled a potential easing in enforcement to help the country rebuild.
Oil hit a five-month high above US$81 on June 23 after the US attacked Iran's nuclear facilities, only to fall back to US$68 on Friday as the Israel-Iran ceasefire reduced tensions and supply risks.
In April it fell to a four-year low below US$60 after OPEC+ said it was tripling its output hike in May and as Trump's tariffs raised concerns about global economic weakness.
OPEC+ pumps about half of the world's oil. As of their decision for July output, the OPEC+ eight have made or announced production increases totalling 1.37 million bpd, or 62 per cent of the 2.2 million bpd cut they are unwinding.
The UAE is also increasing output by 300,000 bpd, bringing the total hike to 2.5 million bpd.
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