IEA: Oil prices likely to rise after OPEC+ meeting

The OPEC+ group announced late last week that it would keep current oil production cuts at existing levels and extend their duration, but also that Saudi Arabia would voluntarily make a further substantial cut to its production. Fatih Birol, executive director of the International Energy Agency (IEA), commented that the likelihood of prices rising had increased further. The IEA had already forecast a possible supply deficit and related price volatility in the second half of this year.

In early May, we reported that after a prolonged series of oil price declines, oil analysts saw fundamentals in the oil market pointing to a trend reversal. They saw support for prices at USD 75/bbl, particularly in the actions of the OPEC+ group, which unexpectedly announced additional oil production cuts of 1,66 million barrels per day (bpd) in the first half of April this year, effective until the end of 2023. The group’s production cuts thus amount to 3,66 million bpd, or approximately 3,7 % of global demand. There were also indications that these cuts might not be the last and that further cuts could be made at the June meeting. That is what happened.