OPEC+ Saudi, expands production despite falling oil prices

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Eight Opec+members, including Saudi Arabia and Russia, announced A second consecutive monthly increase of 411,000 barrels a day for June, even when oil prices continue to slip due to fears of abandonment and economic weakness.

The oil cartel surprised the market last month, announcing a leap in the same size production, more than three times more than expected. The combination of the OPEC’s supply and fears that US trade rates will cushion the global economy, saw that Brent’s point of reference fell almost one fifth from April 2 to $ 61 on the barrel, near a minimum of four years.

The Opec+ movement to re -pump more oil towards a falling market is a significant change in approach, said Jorge León, a former OPEC employee at the Energy Consulting Rystem.

“Opec+ has just launched a bomb in the oil market,” he added: “The decision last month was a call of awakening. Today’s decision is a definitive message that the Saudi -led group changes the strategy and pursues the market share after years of reducing production.”

For the last three years, Opec+ had cut the collective production almost 6mn B/D to strengthen prices, a strategy that initially maintained dirty above $ 90 a barrel in much of 2022. But its effectiveness has declined in the midst of the typical demand, increasing the production of the United States and the LAx quota discipline.

The tensions inside the cartel have grown, especially with Kazakhstan, who has expanded the departure of his field Tengag Leed Leed and stated that he would prioritize “national interests” on group quotas.

In response, Saudi Arabia has it began to undo the production sidewalkspressing for the increase of this month.

The kingdom, which had reduced its own production by 2MN B/D for the last three years, has become more and more frustrated with most cuts, while other members, including Kazakhstan and Iraq, constantly bombed over their quotas.

Saudi officials are now comfortable to regain supply, even if it leads to a prolonged period of lower prices, according to people who know the thought of the kingdom. It is not clear why Saudi, who struggles Balance your national budget due to the lowest prices of oilHe has pivoted into the new strategy, which is likely to drop oil prices for the rest of this year.

Some analysts questioned how much oil would reach the market. Bjarne Schierdrop, Basic Product Analyst of Seb, said that Opec+ production in April fell into 200,000 B/DA due to Venezuelan sanctions, and said that the planned increases could fall if quota infractors such as Kazakhstan, Iraq and Arab Emirates increased in production.