What Will OPEC and Allies Decide on Sunday?

Analysis and Forecast (with 6 charts)

Dear Readers,

OPEC’s mid-year meeting was supposed to be held virtually with no complications. Then the situation changed. OPEC+ ministers will now meet in person in Vienna on Sunday, June 4, as the market eagerly awaits the outcome following weeks of speculation.

OPEC’s decision not to extend invitations to some media outlets,  namely Reuters, Bloomberg, and Dow Jones (owner of Wall Street Journal) to cover the group’s ministerial meeting, and the reaction of various journalists and others on social media, has pushed this much-awaited event further into the limelight and reportedly forced actors affiliated with the oil group to remain tight-lipped, amid a plethora of conflicting reports that have contributed to the recent volatility in the market.

The meeting comes at a critical time. India and China are snapping up more cargoes of Russian crude. In addition to Russian supplies, oil from the other embargoed producers, Iran and Venezuela, is still flowing to the market, while most OPEC members are cutting production.  Meanwhile, oil releases from the US Strategic Petroleum Reserve (SPR) will end in four weeks, while China could start withdrawing oil from its own SPR ahead of summer.  The OPEC meeting also comes at a time when several economists and investors foresee a recession, while OPEC and the International Energy Agency (IEA) expect substantial growth in global oil demand in the second half of 2023.   

While global oil demand is increasing, the growth is lower than earlier expectations.  The US FED is wreaking havoc on the oil market through higher interest rates, which affect the production outlook, and a higher dollar which reduces the quantity demanded. The amount of guesswork regarding the FED’s measures has also been increasing volatility.

In what follows, we revisit recent forecasts on the oil market before we share with readers our view on the upcoming OPEC+ meeting. Some of these predictions need to be taken into consideration when discussing the next move OPEC+ may take on Sunday.

OPEC’s View on the Oil Market in the Second Half of 2023

Global Oil Demand