In a surprising move, OPEC+ has announced plans to increase oil supply later this year, causing oil prices to decline for the week. However, members of the alliance have reassured the market that they are committed to maintaining stability. Saudi Arabia and other OPEC+ ministers have stated that they are prepared to react and adjust supply as needed. This has led to a rebound in oil prices, although they are still on track for a weekly decline. Brent futures are currently trading above $80 a barrel, while West Texas Intermediate is near $76. The response to the OPEC+ plan has been mixed on Wall Street. JPMorgan Chase & Co. expressed skepticism about its bearish impact, citing the fact that many members are already exceeding their assigned quotas. On the other hand, Citigroup Inc. predicts that production cuts will continue into next year.
Since early April, the price of oil has been declining primarily because of concerns about the demand for oil. However, there are ongoing geopolitical risks related to the conflicts in Ukraine and the Middle East, which could potentially lead to an increase in oil prices.
Stefano Grasso, a senior portfolio manager at 8VantEdge Pte, a fund based in Singapore, emphasized that the focus is currently on near-term factors such as the potential loss of cohesion within OPEC+ or any damage to oil infrastructure in Russia or the Middle East.
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