What Do Saudi Arabia & Allies in OPEC+ Want from Accelerating the Unwinding of Voluntary Cuts?

Media and analysts overlooked factors making these production ceiling increases less bearish than perceived. (With 5 Charts)

The group of 8 (or V8), OPEC+ members who made voluntary cuts, agreed to expedite unwinding the 2.2 mb/d cuts by increasing production ceiling by 411 kb/d in May and another 411 kb/d in June. The impact is less bearish than perceived by media and market participants. This raises the production ceiling and not necessarily production. Raising production ceiling legitimizes overproduction that is already in the market. Supplies to the international market (Exports) will be significantly lower as explained below. Three major issues justifying these increases, overlooked by the media and oil market analysts, are discussed below.

1. Market Fundamentals