OPEC+ members could hike July oil production by 411,000 barrels per day
Oil prices surged roughly 4% on Monday after OPEC+ chose to maintain its July output increase at the same level as in May and June.
Brent crude futures rose by $2.28, or 3.6%, reaching $65.06 per barrel as of 13:35 GMT. U.S. West Texas Intermediate (WTI) crude gained $2.99, or 4.9%, to trade at $63.78 per barrel.
Both benchmark contracts had fallen over 1% during the previous week.
At a meeting on Saturday, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to boost production by 411,000 barrels per day (bpd) in July—marking the third straight month of increases at that volume. The move is part of a strategy to reclaim market share and penalize countries exceeding their production limits.
On Friday, insiders familiar with the talks suggested the group had considered a larger output hike.
According to oil traders, the 411,000 bpd increase was already factored into Brent and WTI pricing.
“If they had surprised the market with a bigger hike, we could’ve seen a much more negative price reaction at Monday’s open,” said Harry Tchilinguirian, analyst at Onyx Capital Group, in a LinkedIn post.
Meanwhile, Kazakhstan has told OPEC it does not plan to scale back oil production, according to a report by Russia's Interfax news agency, citing the country’s deputy energy minister.
SEB chief commodities analyst Bjarne Schieldrop noted that Kazakhstan would need oil prices to drop to $58 or below for overproduction to become unprofitable.
Goldman Sachs analysts anticipate one final increase of 410,000 bpd from OPEC+ in August. In a note, the bank said that strong physical oil demand, upbeat global activity indicators, and typical summer consumption trends point to continued support for higher production levels. They expect OPEC+ will move forward with the increase when it reviews output for August on July 6.
Morgan Stanley also projects monthly increases of 411,000 bpd through October, eventually restoring 2.2 million bpd.
“There’s no indication yet that the pace of output restoration is slowing,” the bank’s analysts wrote.