Saudi Arabia and Russian Federation may propose a gradual production increase at the June 22-23 meetings in Vienna, intending to offset any supply disruptions in Iran and Venezuela. Or, talks could breakdown and there is no change in output, although with the upside risk to prices, this seems unlikely. Given that growing demand and the time it takes to bring new oil on-line in response to higher prices, it's no surprise prices have risen. OPEC kept its global demand expectations steady. The proposed move could squeeze spare production capacity which is the amount of extra production oil producers can bring onstream and sustain with short notice, which is meant to be used in the event of natural disaster, war, or unplanned supply disruptions.
US crude's relative gains were the result of profit-taking on the wide spread between the two benchmarks, said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. This is 143,000 bpd above the country's quota under the OPEC+ production cut deal, and only about 100,000 bpd below the record-breaking production rate in November 2016, which Russian Federation took as basis for its cuts.
Iraq faces both technical constraints on boosting supply and a political clash with its Kurdish population that's impeded exports, and so may have little to gain from any OPEC agreement to raise production.
Earlier last week, news surfaced that the US government asked Saudi Arabia to boost output to relieve pressure on prices.
For now, global oil demand growth is expected at 1.61 millions of barrels per day (mb/d) in the second half of the year, with total oil demand projected to breach the 100 mb/d level.
The country is exporting a lot more oil than it did before.
Iraq said OPEC should resist pressure to increase oil supplies, strengthening opposition to plans by Saudi Arabia as the group prepares to meet next week. The IMF's most recent World Economic Outlook sees growth in developed and developing economies continuing at a robust pace for the next few years. Basic economics suggest that prices may decline rather than soar. Global oil demand is now estimated at 1.65 mb/d y-o-y to record average 98.85 mb/d. Get hedged for the next oil and product price spike. A short-term blip in prices won't have much impact on sustainable energy sources. Oil is predominantly used in transportation.
Iran, which faces U.S. sanctions restricting trade of its oil that go into effect November 3, produced 3.83 million b/d in May, up 10,000 b/d from April, according to secondary sources.