No major policy change expected at OPEC+ meet

Opec and Opec+ began two days of meetings on Wednesday with sources saying a big policy change was unlikely this month.

At its last gathering in early June, Opec+ decided to raise output each month by 648,000 barrels per day (bpd) in July and August, compared with a previous plan to add 432,000 bpd over three months. Opec+ consists of the Organisation of the Petroleum Exporting Countries and allies such as Russia.

Washington welcomed the producers’ decision in June.

International prices hit their highest since the record levels of 2008 after the West imposed sanctions on Russia over its invasion of Ukraine begun on Feb. 24, which Moscow calls “a special military operation.”

They have eased since this year’s March peaks, but rose for a fourth day on Wednesday to approach $120 a barrel because of tight supply and concern Opec has little ability to raise output.

US President Biden will travel to the Middle East, including Saudi Arabia next month, and is widely expected to urge Riyadh to raise production.

At least five Opec+ delegates said this week’s meeting will focus on confirming August output policies and would not discuss September.

Two other delegates said the issue of production after August could emerge but it was unclear what steps could be taken.

The first of the meetings this week — attended by Opec ministers only — discussed administrative issues and concluded on Wednesday without any major decision, delegates said.

On Thursday, Opec+ ministers from the joint ministerial monitoring committee will begin discussions from 1100 GMT and then hold a full online Opec+ meeting.

Meanwhile, oil prices gained for a fourth straight session on Wednesday as data showed a drawdown in US crude stockpiles, adding to ongoing worries of tight supply, which have offset concerns over a weaker global economy and demand.

Brent crude futures for August rose $1.42, or 1.2%, to $119.40 a barrel as of 10:59am. The August contract will expire on Thursday and the more-active September contract was at $115.35, up $1.52.

US West Texas Intermediate (WTI) crude gained $1.13, or 1%, to $112.89 a barrel.

Both contracts rose more than 2% on Tuesday as concerns over tight supplies due to Western sanctions on Russia outweighed fears of that demand may slow in a potential future recession.

US crude inventories fell last week despite production hitting its highest level since April 2020, during the first wave of the coronavirus pandemic. However, fuel stocks rose as refiners ramped up activity, operating at 95% of capacity, the highest for this time of year in four years.

Agencies