There's a risk OPEC will increase its crude- production target when it meets on June 5th, extending a strategy that helped prices to slump last year, researcher Petromatrix GmbH said, echoing comments by Morgan Stanley.
Saudi Arabia, the 12-nation group’s biggest producer, could argue that the Organisation of Petroleum Exporting Countries must make way for surging supplies from Iraq and a possible return of Iranian barrels should sanctions be eased against the Persian Gulf state, Petromatrix analyst Olivier Jakob said in a report on Tuesday.
Opec is more likely to increase output limits than curb them, Morgan Stanley analyst Adam Longson said on Monday. Brent crude, the global benchmark, slumped almost 50 per cent last year as Saudi Arabia led Opec in a strategy of not lowering a production target, insisting suppliers outside the group must help tackle a surplus.
The organisation’s members have exceeded their daily limit of 30 million barrels since June 2014, most recently by as much as 1.6 million barrels a day, according to estimates .
“There is a risk for Opec to actually increase the official quota closer to actual production level,” Mr Jakob said. “This will not change actual output and could even be presented by some as a ‘cut’ from current supplies, it could therefore satisfy both the supply hawks and doves of Opec.”
Brent rose as much as 1.5 per cent to $65.88 a barrel on the ICE Futures Europe exchange in London.
- Bloomberg
