OPEC+ is likely to keep to their current pace in gradually easing curbs on oil supply. The possible increase of Iranian oil in the market is seen as one of the factors for this as they expect demand for oil to recover.
The organization has decided in April to stick with their plan of 2.1 million barrels per day (bpd) of supply in the market from May to July as they forecast the possible rise in the demand for oil despite the high number of cases in India.
A rally in oil kicked in after this, gaining more than 30% this year. The upside however, has been limited even with the prospect of more output from Iran. This may have possibly been due to talks about the country reviving their nuclear deal.
Brent reached its highest since March at $71 a barrel on Tuesday.
Sources from OPEC+ said that this confirmed the forecast of OPEC+ experts that there will be a significant jump in oil demand in 2021. Around 6 million bpd increase is being expected as the world comes out of the pandemic.
No new decision on the current output policy is expected beyond July since the effect of the influx of Iranian supply is not clear. However, a new OPEC+ meeting has been planned for June 24.
Analyst Eugen Weinberg of Commerzbank stated that OPEC+ may stick with the increases in June and July for now rather than plan for any further production hikes in August and onwards. But he added that an increasingly tight market may require them to review the agreement at short notice.
Last year, OPEC+ reduced output by a record 9.7 million bpd due to slowing down of demand. By July the cut will stand at 5.8 million.