OPEC+ Report Coming on May 11: Will the Market Signal Another Production Cut?

OPEC and its allies, known as OPEC+, agreed last month to cut production by 1.16 million barrels per day (bpd) from May until the end of the year. This production cut of more than 1 million bpd follows a cut of 2 million bpd announced in October 2022, when the cartel agreed to cut production from November until the end of 2023, despite calls by the US to pump more oil It was The two production cuts account for about 3 percent of the world’s oil supply.

Oil prices rose more than 8 percent to $83.95 a barrel after the announcement, the most in more than a year. The collapse of major global banks, including Silicon Valley Bank (SVB) and Credit Suisse, pushed benchmark Brent crude down to $72 a barrel in March 2023, the lowest in 15 months.

With supply cuts in China and improving demand, oil prices could again rise to the level of $100 a barrel, last seen in July 2022.

OPEC+ has said that their meeting in early June will be held in person in Vienna, rather than virtual. Experts say this indicates that the cartel is looking more active in supporting oil prices and that further production cuts may follow.

Read also: Oil ends 3-day rally on US inflation worries, unexpected rise in inventories

Here are the highlights of OPEC’s monthly oil report for April 2023:

The world economic growth forecast for 2022 has been revised slightly to 3.3 per cent, given the better-than-anticipated economic performance in 2H22 in various major economies. The 2023 global economic growth forecast remains unchanged at 2.6 percent.
World oil demand growth forecast for 2022 remains at 2.5 million barrels per day (mb/d), largely unchanged from the March assessment. For 2023, it is also unchanged from the March 2023 assessment of 2.3 mb/d.
Non-OPEC liquid supply growth forecast for 2022 remains at 1.9 mb/d, largely unchanged from the March 2023 assessment. The main drivers of liquid supply growth for 2022 were the US, Russia, Canada, Guyana, China and Brazil, while the largest declines were from Norway and Thailand.
– For 2023, non-OPEC liquid supply growth remains broadly unchanged from March and is forecast to increase by 1.4 mb/d. The US, Brazil, Norway, Canada, Kazakhstan and Guyana are expected to be the main drivers of liquid supply growth, while mainly Russia is expected to decline.
– In 1Q23, world oil demand is forecast to grow at a healthy 2.1 mb/d year-on-year due to improving oil demand data from China and other non-OECD regions, particularly the Middle East . and Asia.
– World oil demand is expected to increase by approximately 2.4 mb/d year-on-year in 2Q23, 2.5 mb/d year-on-year in 3Q23 and 2.3 mb/d year-on-year in 4Q23.
– In product terms, global demand for petrol and diesel is forecast to grow by 0.6 mb/d and 0.5 mb/d, respectively, year-on-year in 2Q23. In 3Q23, demand for these two products is forecast to improve further, with global petrol demand forecast to increase by 0.7 mb/d and diesel by 0.6 mb/d, year-on-year.