Investing.com -- Crude oil futures and Brent both declined by 1.6% amid reports from Bloomberg that OPEC+ may decide to increase oil production in July, potentially tipping the balance of global supply over demand growth. The news comes ahead of the OPEC+ meeting scheduled for June 1, where the organization will discuss a possible third consecutive production increase.
The potential output hike under consideration is a substantial 411,000 barrels per day for July, which would mark a significant shift from the initially planned amount and represents about 1% of the current OPEC+ output. This development follows previous increases announced by OPEC+ for May and June, each also at 411,000 barrels per day, which have already contributed to a downward trend in oil prices.
OPEC+ has indicated that the proposed supply increases are intended to meet rising demand. However, internal sources have suggested various other motivations, including the desire to penalize members that have overproduced, regain market share, and respond to political pressures.
Saudi Arabia, the de facto leader of OPEC+, has previously issued warnings to member countries like Kazakhstan and Iraq for not adhering to their production quotas. Despite commitments to comply, there has been little action taken, particularly by Kazakhstan, to curb output from international oil companies operating within its borders, leading to continued near-record export levels.
The upcoming OPEC+ meeting is set to be a pivotal moment for the oil market, as the group’s decision on production levels could have significant implications for global oil supply and prices. Investors and market observers will be closely monitoring the outcome of the discussions.