Brent oil rose above $70 a barrel after the OPEC+ group predicted a tighter global market ahead of a meeting on production policy. After registering a second consecutive monthly rise, London futures surged as much as 1.5 percent. According to an OPEC+ committee’s assessment of the market, the oil surplus developed during the epidemic is almost gone, and stockpiles will swiftly decline in the second half of the year.
When the coalition meets later Tuesday, it is expected to ratify a planned output rise for July. A strong rebound in the United States and Europe has given OPEC+ confidence that markets can take more barrels, despite the possibility of increased supply from Iran if the nuclear deal is resurrected and a Covid-19 resurgence in Asia, particularly India. From September to December, OPEC Joint Technical Committee expects stockpiles to shrink by at least 2 million barrels per day.
In the absence of Iranian supplies, market fundamentals are robust, and oil prices might rise to $80 a barrel by the middle of the third quarter, according to Fereidun Fesharaki, chairman of industry consultancy FGE. OPEC Secretary-General Mohammad Barkindo stated at the Monday meeting that Iran’s return “would proceed in an orderly and transparent manner,” not disrupt the stability that other OPEC+ states have worked hard to achieve.
However, Iranian Oil Minister Bijan Namdar Zanganeh assured reporters in Tehran that the country could quickly resume oil production. Meanwhile, Asian refiners deal with what is projected to be a brief period of low earnings due to the virus’s comeback, which is launched to reduce demand. Singapore’s complex refining margins, a proxy for the region, have been falling since the end of April, but rising vaccination rates are likely to boost demand.