By CLYDE RUSSELL
LAUNCESTON, Australia — The crude oil market devotes considerable energy to what OPEC+ says, but perhaps a little less to what it actually does when it comes to the supply of the world’s most important commodity.
The eight members of the wider group that had implemented voluntary production cuts met at the weekend and decided to raise output by 411,000 barrels per day (bpd) in July, the third straight month of the same increase.
More than half of the lift in output will be split among the big three of the OPEC+ group, namely Saudi Arabia, Russia and the United Arab Emirates.
However, there are two questions that need answering.
Firstly, will the eight members party to the agreement actually increase output by the agreed volumes, and secondly, if they do will they find buyers for the additional oil?
A point worth noting is that OPEC+, and much of the wider market, talk in terms of production, but the more important metric is export volumes, as it’s the amount of crude flowing around the globe that sets the price and the supply-demand balance.
The group’s top producer, Saudi Arabia, actually saw weaker exports in April of 5.75 million bpd, down from March’s 5.80 million bpd, according to data complied by commodity analysts Kpler.
Saudi Arabia’s exports kicked up to 6.0 million bpd in May, the Kpler data showed, and are expected to rise even further in June, suggesting that there is a lag between output agreements and actual exports.
Russia’s seaborne exports of crude were 5.07 million bpd in March, remained largely flat at 5.12 million bpd in April and then dipped to 4.82 million in April, showing that the agreed increase in output didn’t translate into higher shipments.
Inventories, demand
The question still remains as to whether any additional oil is actually needed, especially in the top-importing region Asia.
In the statement after the May 31 meeting, OPEC+ reiterated its view that the global oil market has “healthy” fundamentals “as reflected in low inventories.”
