Oil surges past $75 as OPEC+ discuses 2 million bpd output boost

Oil prices shot up early on Thursday as reports started to emerge that OPEC and its non-OPEC partners led by Russia were discussing another gradual increase in oil supply of 2 million barrels per day between August and December.

At 9:00 a.m. EDT on Thursday, at the close of the initial OPEC-only meeting where ministers read prepared statements about the general market situation, the U.S. benchmark WTI Crude hit $75.90, exceeding the $75/barrel mark for the first time since October 2018. Brent Crude was above $76.60.

The first OPEC meeting ended with no discussion of an output increase, but all eyes are now on the JMMC (Joint Ministerial Monitoring Committee of OPEC) meeting, which starts at 10:30 am EDT, and the OPEC + meeting opening two hours later.

Before the official start of Thursday’s meetings, a source at OPEC+ told Reuters that the alliance was preparing to move toward easing the production cuts by 2 million bpd from next month until the end of the year, adding around 400,000 bpd of supply to the market each month between August and December.

This would be lower than analyst forecasts of at least 500,000 bpd output hike for August alone.

Other delegates told Reuters, as well as Bloomberg, that OPEC+ leaders Saudi Arabia and Russia already had a tentative agreement – before the official meetings began – to further ease the cuts from August.

Sources at OPEC+ also tell media outlets that any agreement to further unwind the curbs would hinge on the ongoing talks about Iran and the United States returning to the so-called nuclear deal.

The OPEC+ group is also debating the extension of the current agreement beyond its end-date, of April 2022. Delegates are considering potentially extending the deal until the end of 2022.

Currently, the OPEC+ alliance keeps around 5.7 million bpd off the market. It will have returned by end-July 2 million bpd of supply between May and July, as per the agreement earlier this year. Now another 2 million bpd gradual increase – if confirmed – signals confidence in demand recovery but also a more tentative approach than analyst expectations of at least 500,000 bpd production hike for August alone.

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