It is most unlikely that the Organization of Petroleum Exporting Countries, OPEC+ group would consider another round of oil production cuts when ministers meet this weekend.
The OPEC and its allies from several non-OPEC producers led by Russia are heading to the June 4 meeting amid market speculation whether the OPEC+ alliance will wrong-foot the short sellers again by announcing deeper oil production cuts.
Oil prices have slumped to the low-$70s Brent in recent days, which analysts believe is not enough for Saudi Arabia and other Middle Eastern producers to balance their budgets this year.
Saudi Arabia needs oil prices at $80.90 per barrel to balance its budget this year, the International Monetary Fund (IMF) said last month.
Last week, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, warned traders again, against shorting oil futures.
“I keep advising them that they will be ouching they did ouch in April,” Abdulaziz bin Salman said in comments interpreted as a warning that speculators shouldn’t try to guess OPEC+’s next move.
Later in the week, Russia hinted that the current state of the market doesn’t call for additional cuts.
Russia is also hinting that it would prefer its partners of the OPEC+ group to leave oil production unchanged, as Moscow is okay with the current oil prices and production quotas.
Last month, Russian President Vladimir Putin said that energy prices were approaching ‘economically justified’ levels.
Analysts expect global oil demand to rebound in the second half of the year with the driving season and a Chinese rebound in fuel consumption. However, the ever-present fears of recessions weigh on oil prices, and should a recession materialize, oil’s demand growth may not be as high as currently expected.
Most analysts according to Reuters expect OPEC+ to leave the oil production levels unchanged. But the group has surprised the market several times over the past few years, including with the shock cut it announced two months ago.