We don’t foresee oil prices holding above $90 for an extended period this summer.

There could be occasional spikes above this level, especially with significant geopolitical developments or strong high-frequency data releases in the coming weeks. However, several factors suggest that we’ll likely remain within a similar range to recent months. OPEC+ production cuts will act as a floor on prices along with Strategic Petroleum Reserves purchases by China, though specifics on timing and volumes of those remain uncertain. Given current high price levels, there may be a cautious approach to these SPR purchases.

Could OPEC+ bring back barrels ahead of Q4?

Last summer, despite significant global oil market draws, OPEC+ didn’t accelerate any supply return. I anticipate a similar stance this year. Most market observers expect substantial draws in the coming months. OPEC will likely wait for these draws to materialize before adjusting production policy. If the anticipated draws materialize, they may begin to gradually restore production from Q4. Conversely, there’s more risk in terms of delaying production return, especially if H2 demand disappoints. Overall, we’re optimistic about demand, except for some concerns in China, particularly in diesel. However, in the US and Europe, we see improved industrial activity post-recession earlier this year, supporting robust demand growth of about a million barrels per day in global liquids in 2024.

Are current prices attractive for OPEC+ producers?

We’re starting to see levels that are probably close to where some of them are comfortable in terms of their budget needs. However, we’ve only just achieved this level, so they will want to see higher prices sustained for a bit longer to feel secure. Also, the recent rapid rally, while promising, might be too fast relative to fundamentals. We’re finally seeing significant draws, especially in the US and other regions, however, the significant strengthening of benchmarks like Brent and WTI compared to East of Suez benchmarks, such as Dubai, concerns us. It suggests an influx of crude into the Atlantic basin in the next cycle, potentially creating a glut similar to what we saw this spring, with high crude inventories in Europe and the US. If this occurs, prices may need to correct lower before a sustained rally in the next cycle.