Any OPEC+ Supply Return Gradual While Maintaining Supply Deficit in H2

Any reintroduction of OPEC+ supply is expected to happen gradually while maintaining a supply deficit in case of weaker than expected demand during H2, according Energy Intelligence citing delegates. The voluntary cuts of around 2.2mb/d would be the first to be unwound if agreed at the June 1 minister meeting in Vienna.

• The future market balance depends on OPEC decisions, but OPEC should be able to return about 1mb/d in H2 and still maintain a full-year deficit of 350kb/d. Global oil market deficit is estimated at 1.1mb/d in Q1 and 0.8mb/d in Q2.
• The decision to cut will be driven by the trajectory of oil demand and non OPEC+ supply in H2 2024, macroeconomic factors, geopolitical developments and internal pressure to unwind cuts from member states.
• OPEC remains bullish on demand growth with a forecast of 2.25mb/d compared to a forecast of 1.5mb/d from Saudi Aramco and 1.25mb/d from Energy Intelligence. Consensus suggests demand in H2 2024 will be stronger than in H1 2024.
• A price band of $75-$80/bbl as a favourable for most OPEC producers. Prices of $100/bbl may endanger the global economy while $60/bbl appears too low to cover national budget requirements.
• Member states currently have over 5mb/d of spare production capacity.