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OPEC+ Contemplates Extending Oil Production Cuts into June Meeting
OPEC+ Contemplates Extending Oil Production Cuts into June Meeting
OPEC+ Contemplates Extending Oil Production Cuts into June Meeting
– By majorwavesen

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OPEC+ Contemplates Extending Oil Production Cuts into June Meeting

The upcoming OPEC+ meeting in June looms with the critical decision of whether to extend oil production cuts into the latter half of the year taking center stage. However, beyond this immediate concern, the alliance confronts the broader challenge of managing production capacity in the long term.

Currently, OPEC and its allies are evaluating the production capabilities of individual member countries. Analysts from JPMorgan Chase & Co. highlight that major nations like the United Arab Emirates, Kazakhstan, and Iraq could witness substantial upgrades in their combined capacity, potentially adding over 300,000 barrels per day (bpd) by the following year. Abu Dhabi has already signaled a significant increase, with state producer ADNOC announcing a boost of 200,000 bpd to reach 4.85 million barrels per day.

While these planned expansions could bolster individual member states, they also pose a risk to the cohesion of the OPEC+ alliance and could influence global oil prices. Saudi Arabia, leading OPEC+, already holds considerable spare capacity, and projections indicate a slowdown in global oil demand growth by 2025. This presents challenges in maintaining stability in global oil supplies, potentially leading to price volatility.

Natasha Kaneva, an analyst at JPMorgan Chase & Co., underscores that OPEC’s primary concern lies in addressing anticipated imbalances in 2025. Even if the coalition extends supply curbs this year, it may not fully mitigate the challenges expected in the future.

The issue of accommodating members’ capacity growth has historically been a point of contention for OPEC+. In 2021, tensions between the UAE and Saudi Arabia nearly led to a fracture within the alliance over Abu Dhabi’s expansion aspirations. Similar tensions emerged last year, resulting in Angola’s departure from the group after decades of membership.

Source: Bloomberg

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