They believe fundamentals are supportive, inventory levels are low relative to the five-year average, and we’re entering the summer season, which they consider favorable timing. Still, others might think fundamentals don’t seem to support increasing supply; we’re not seeing improvement in key economic indicators in Asia, Europe, or the US. Perhaps there are internal pressures within OPEC+ driving the agenda, with countries like Kazakhstan, Iraq, and the UAE pushing hard to raise output. Saudi Arabia had been the glue holding things together, leading with a market-stabilizing approach, but now the internal pressures may have become too much. Kazakhstan, for instance, has spent billions on upstream investment and wants to see returns.
Prices seem to be stable considering the plan to increase barrels?
So far, we haven’t seen a big impact. Prices fell earlier this week, but that was due to factors such as tariffs and the global demand outlook. News of tougher US sanctions on Venezuela and Iran, along with hopeful signs of a US-China tariff resolution, have helped them rebound around $2.50. If fundamentals do improve, then the OPEC+ decision to raise supply might be vindicated. Until then, it remains uncertain.
Is this the start of a structural shift, moving into an era of maximizing production?
I believe once members are satisfied with their quotas, the group will return to a more typical posture. A return to market share wars would be the wrong path. We’ve seen this before - in 2014 - and it ended with oil crashing to $10–$15 per barrel. Nobody wants to go back there. For producers like Oman and Saudi Arabia, we need prices above $80 just to start breathing again. The focus should remain on fundamentals.