OPEC+ will hold its next meeting on June 1, and UBS expects that the organization will agree to extend the voluntary production reduction agreement to maintain the balance of the oil market.
The Zhitong Finance App learned that OPEC+ will hold its next meeting on June 1. UBS expects that the organization will agree to extend the voluntary production reduction agreement to maintain the balance of the oil market.
According to information, OPEC+ member states, led by Saudi Arabia and Russia, agreed to extend the agreement to voluntarily cut production by 2.2 million b/d until the second quarter (end of June) to avoid global oversupply and support prices.
The restrictions were implemented on the basis of various measures announced earlier since late 2022, bringing the total promised production reduction to about 5.86 million b/d, slightly less than 6% of global daily demand.
UBS analysts said in a May 14 report: “In recent weeks, oil inventories have declined less than we expected, and US interest rates have remained high for a longer period of time, which may have an impact on OPEC+'s proactive, pre-emptive, and preventive policies.”
“We now expect that the eight member states that have voluntarily cut production will extend the production reduction agreement for at least 3 months before the regular meeting to be held in early June.”
The Swiss bank added: “Additional production capacity will be an important tool for starting negotiations on extending the Declaration of Cooperation (Declaration of Cooperation), which currently expires at the end of this year.”
UBS remains moderately optimistic about the outlook for crude oil prices over the next few months, thanks to healthy demand and OPEC+ countries' efforts to keep the oil market in balance. The forecast predicts that the price of Brent crude oil will reach 91 US dollars/barrel in June and September, and 87 US dollars/barrel in December.