OPEC members are discussing making a third consecutive oil production surge in July, to be decided at the group’s meeting in just over a week, delegates said.
An output hike of 411,000 barrels a day for July — triple the amount initially planned — is among options under discussion, although no final agreement has yet been reached, said the delegates, asking not to be named because the information is private. A final decision is due to be taken at a gathering on June 1.
The cartel has helped sink crude prices since announcing 411,000-barrel hikes for May and June — equivalent to about 1% of current OPEC output — in a historic break with years of defending oil markets. Oil made a fresh plunge on Thursday, dropping 0.9% to $64.31 a barrel as of 9:13 a.m. in London.
While OPEC says the supply increases are to satisfy demand, officials have privately proffered a range of motives, from punishing over-producing members to recouping market share and placating President Donald Trump.
Group leader Saudi Arabia warned errant members such as Kazakhstan and Iraq at their last meeting that it could deliver further production increases unless they fall in line with their quotas. Despite some promises of atonement, the Kazakhs have made little effort to rein in international oil companies operating in the country and continue to export near record levels.
Oil declined for a third day with OPEC members discussing another super-sized production increase for July, just as demand faces headwinds from the US-led trade war.
Brent traded near $64 a barrel, touching the lowest in a week. If OPEC approves the potential increase of 411,000 barrels a day when it meets on June 1, it will mark the third month in a row the cartel has agreed to boost supplies by triple the initially scheduled amount.
Oil inventories are rising in the US, still the world’s biggest consumer of the commodity. US commercial inventories of crude rose for a second week, according to data on Wednesday, while gauges of gasoline and distillate demand were weak, even as the summer driving season approaches.
In broader markets, concerns about Washington’s ballooning deficit spurred declines in US stocks, government bonds and the dollar, with Asian equities following them lower. The ructions come at a time when investor appetite for US assets was already waning across the globe.
Elsewhere, the UK urged Group of Seven allies to cut their price cap on Russian oil, saying after a finance ministers’ meeting in Banff, Canada, that the move was necessary to put further pressure on President Vladimir Putin to end Moscow’s war in Ukraine.
