LONDON/MOSCOW, March 24 (Reuters) – OPEC+ is expected to follow through with its plan to increase oil output for the second consecutive month in May, according to four sources familiar with the matter. The decision comes amid steady oil prices and the group’s intention to make some members reduce production to compensate for past overproduction.
OPEC+ – a group that includes OPEC and allied producers led by Russia – controls over 40% of the world’s oil supply. The group is scheduled to raise output by 135,000 barrels per day (bpd) in May. This will be the second increase as part of a strategy to reverse some of the production cuts that were in place since 2022.
At the same time, OPEC+ is looking to raise output targets for members that have complied with their previous quotas. However, they are also pressuring producers who have overproduced to reduce their output temporarily and make up for the excess production.
On March 20, the group announced that seven members would make additional monthly reductions starting this month and continuing through June 2026. These compensation cuts, designed to address earlier overproduction, are expected to be larger than the planned output increases.
According to one OPEC+ delegate, these compensation cuts will help the group stay on track with its monthly output hikes. Three other sources also confirmed to Reuters that they expect the output schedule to continue as planned from May.
Brent crude, the international benchmark, traded above $72 a barrel on Monday, up from a low of $68 earlier in March, the lowest since December 2021, shortly after OPEC+ decided to proceed with an output increase in April.
Energy consultancy Energy Aspects believes the unwinding of production cuts can proceed due to low crude inventories, rising demand during the upcoming summer season, and efforts to improve compliance with the cuts. RBC Capital Markets analyst Helima Croft stated that market participants are not expecting another pause at this stage, adding that the real question is how much the compensation cuts will offset the planned increases.
Since 2022, OPEC+ has been cutting output by 5.85 million bpd, roughly 5.7% of global supply, to stabilize the market. The group’s ministerial committee, with the power to recommend changes to production policies, is scheduled to meet on April 5. Russian Deputy Prime Minister Alexander Novak has previously stated that OPEC+ may reverse the output increase decision after April if market conditions shift.
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