OPEC+ approves another crude quota jump for July

Eight countries implementing voluntary crude production cuts agreed May 31 to another accelerated quota hike for July, as they bid to regain market share.

OPEC+ voluntary cutters' quotas will rise by 411,000 b/d in July -- the same level as increases for May and June, OPEC said in a statement.

It cited "'a steady global economic outlook and current healthy market fundamentals as reflected in low oil inventories" as reasons for the third consecutive accelerated quota increase.

The group, which includes Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Oman, Algeria and Kazakhstan, will next meet July 6 to discuss August production levels.

OPEC said that the gradual increases may be paused or reversed, subject to evolving market conditions.

"This flexibility will allow the group to continue to support oil market stability," the statement said.

Analysts had expected the move, which comes as prices hover around $65/b. Prices have recovered since the last OPEC+ announcement on quota easing drove prices down close to $61.09/b in early May.

S&P Global Commodity Insights sees seasonal summer demand obscuring the impact of OPEC+ cut easing in the near term, but supply growth will eventually outweigh demand growth.

"If this happens, and there is no subsequent output cut, we project Dated Brent prices will fall to $50/b or less by year-end," Commodity Insights said.

Platts last assessed Dated Brent at $63.83/b on May 30.

Actual OPEC+ production may see smaller increases through the summer than quotas imply.

In April -- the first month that quotas were eased -- OPEC+ output was flat month over month at 41.01 million b/d, according to the Platts OPEC+ Survey from Commodity Insights.

"We will not have a barrel match between what is nominally unwound and the actual number of barrels added to the market, because some countries are near their capacity and others are not complying with either quotas or compensatory cuts," he said.

All producers in the group have committed to compensating cuts for overproduction since the beginning of 2024, aside from Algeria, which has met all its targets.

According to the last published plan, released by the OPEC Secretariat on April 16, compensation cuts will total 378,000 b/d in May, 431,000 b/d in June and 455,000 b/d in July.

Producers submit revised plans once a month, but have yet to make those submitted in May publicly available.