Markets thirsty for oil despite boosts in Opec+ output: UAE

Markets are thirsty for oil because they are absorbing Opec+ production increases without building inventories, United Arab Emirates Energy Minister Suhail Al Mazrouei said on Wednesday.

Opec+, which pumps about half of the world’s oil, has been curtailing production for several years to support the market. But it has reversed course this year to regain market share and as US President Donald Trump demanded the group pump more to help keep gasoline prices lower.

Opec+ began to unwind cuts of 2.17 million barrels per day in April with a boost of 138,000 bpd. Hikes of 411,000 bpd followed each month in May, June and July. On Saturday, the group approved a 548,000-bpd jump for August.

Mazrouei said he was not worried about supply overhang even after the latest production rises.

“You can see that even with the increases for several months we haven’t seen a major buildup in inventories, which means the market needed those barrels,” he said.

“What we want is stability and you cannot be short-sighted just by looking at the price. We need the price to be right for investments to happen,” he said, adding that many countries with large oil reserves were still not investing enough.

Mazrouei was speaking on the sidelines of a biennial Opec seminar, which brings together ministers and executives from oil majors.

Opec has withheld media access to reporters from Reuters and several other news organisations to cover the seminar, reporters and several people familiar with the matter said.

Saudi Energy Minister Prince Abdulaziz bin Salman spoke at the seminar about the need for a flexible energy transition guided by data and technology, including oil and gas and not at the cost of affordability, participants told Reuters.

Opec+ will likely approve an increase of around 550,000 bpd for September when it convenes on August 3, sources told Reuters.

That will complete the return to the market of 2.17 million bpd of voluntary cuts from eight OPEC+ members and allow the UAE to also complete an additional 300,000 bpd output jump.

Opec+ still has separate cuts of 3.65 million bpd in place, consisting of 1.65 million bpd in voluntary cuts by eight members and some 2 million bpd across all members. The cuts expire at the end of 2026. Oil prices rose on Wednesday, maintaining their highest levels since June 23, lifted by attacks on shipping in the Red Sea and a forecast for lower US oil production while uncertainty over US tariffs loomed in the background.

Brent crude futures gained 10 cents, or 0.1%, to $70.25 a barrel by 1057 GMT. US West Texas Intermediate crude was up 15 cents, or 0.2%, to $68.48 a barrel.

After months of calm in the Red Sea, attacks in the major global shipping lane were renewed in the past week, which sources attribute to Yemen’s Iran-allied Houthi militia.

A mission was under way on Wednesday to rescue the crew from a cargo ship which sank in the Red Sea following an attack that killed at least four crew members. The Houthis have not claimed responsibility for the attack.

Oil prices were also buoyed by an Energy Information Administration forecast on Tuesday that the US will produce less oil in 2025 than previously expected, as declining oil prices have prompted US producers to slow activity.

On Tuesday, US President Donald Trump said he would announce a 50% tariff on copper, aiming to boost US production of a metal critical to electric vehicles, military hardware, the power grid and many consumer goods.

The announcement came as Trump delayed a deadline for some tariffs to August 1, providing some hope to major trade partners that deals to ease duties could still be reached, though that left many companies still uncertain on the path forward.

While there is concern that the tariffs could curb demand for oil, more immediately there was strong travel demand during the US July 4 holiday weekend, while data also showed possible crude inventory builds in the US of around 7.1 million barrels.

With the Red Sea strikes and higher US holiday fuel consumption during summer, “the idea of ample future supply must give way to short-term considerations,” said a research note from oil broker PVM.

Official inventories data from the US Energy Information Administration is scheduled for release at 1430 GMT.

Opec+ oil producers were set for another big output boost for September as they complete both the unwinding of voluntary production cuts by eight members, and the United Arab Emirates’ move to a larger quota, five sources said.

This followed a Saturday announcement from the group approving a 548,000 barrels per day supply increase for August.

“Oil prices have stayed surprisingly resilient in the face of accelerated Opec+ supply additions,” said DBS Bank’s energy sector team lead Suvro Sarkar.

Reuters