OPEC and its partners are poring over oil market forecasts and scenarios, buoyed by what Secretary General Mohammed Barkindo called an "overall brighter picture" in the world's battle against COVID-19 but without a consensus so far on how to set August production levels.
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The 23-country OPEC+ alliance is scheduled to convene July 1 for what could be a long day of talks.
That the oil market will be in deficit in the second half of the year is not a matter of debate.
But stubbornly persistent infection rates in many parts of the world and OPEC kingpin Saudi Arabia's customary conservatism on production policy has somewhat tempered expectations for how much the alliance will raise output quotas.
Analyst predictions have largely coalesced around a production increase of 500,000 b/d or so, far short of the volume many say is needed to satisfy rebounding global oil demand, prompting fears of a price squeeze.
But some delegates have told S&P Global Platts that they remain wary of a jump in Iranian crude exports if Washington relieves oil sanctions on Tehran with a revived nuclear deal later this year. The coming end of the summer driving season and the onset of autumn refinery maintenance schedules may also give members pause.
"Saudi Arabia remains cautious on demand and Iran nuclear talks, while Russia is more focused on regaining market share," Platts Analytics said in a note. "However, with Brent already in the mid-$70s, both will likely be committed to not overheating the market."
An advisory technical committee met June 29 to review the latest forecasts devised by the OPEC secretariat, the base case of which sees oil demand rising 6 million b/d in 2021, with world economic growth at 5.5%. OECD oil inventories have dipped below the 2015-2019 average that OPEC+ members are targeting.
How that translates into production policy is still undetermined, delegates said.
"We just left open the deficit in the market for the second half of 2021 for interpretation and for the ministers to make decisions," one said on condition of anonymity to discuss the private deliberations. "Of course, we highlighted the uncertainties, for example the new Delta variant and the potential return of Iranian production."
Another delegate said the technical committee examined market outlooks through 2022, which contained many uncertainties.
"I hope the ministers will not be confused," the delegate said.
For now, the near-term prospects for the market appear to favor the bulls.
Platts assessed Dated Brent on June 29 at $75.95/b, a more than 50% rise since the start of the year and a far cry from when the price bottomed out at $13.24/b on April 21, 2020.
"The overall brighter picture in relation to the pandemic recovery efforts has led to significantly improved oil market conditions and prospects for future growth," Barkindo said in his opening remarks to the technical committee meeting.
A 500,000 b/d increase in quotas for August would bring the OPEC+ alliance's collective production cuts down to about 5.3 million b/d, continuing the unwinding of the historic 9.7 million b/d cut that was implemented in May-July 2020.
The group's compliance with its quotas has largely been solid, though overcompliance by some members, such as Saudi Arabia and Angola, has papered over lax discipline by others, notably Russia, Iraq and Kazakhstan.
Inconsistent conformity has been a source of tension at previous OPEC+ meetings and could be another flashpoint as the alliance seeks to apportion a production increase. Under the deal, Iran, Libya, Venezuela and Mexico are exempt from quotas.
The formal negotiations will kick off July 1 with OPEC's 13 members meeting at 1 pm Vienna time (1100 GMT).
The nine-country OPEC+ Joint Ministerial Monitoring Committee co-chaired by Saudi Arabia and Russia, which had been scheduled to meet June 30, will instead convene after the OPEC meeting, delegates said.
Then Russia and nine other allies will join with OPEC for a full OPEC+ meeting beginning at 5 pm Vienna time (1500 GMT).