Oil Prices Rebound as Investors Consider OPEC+ Production Hike
Oil prices were regaining some losses on Thursday, as investors weighed the possibility of an increased production from OPEC+ against conflicting tariff signals from Donald Trump and the ongoing nuclear talks between the United States and Iran.
At 4:34 a.m. CDMX, Brent futures were up 52 cents, or 0.79%, at $66.64 a barrel, while West Texas Intermediate (WTI) in the United States gained 59 cents, or 0.95%, to $62.86.
Oil Prices Dropped Nearly 2% on Wednesday
The previous day, oil prices had fallen almost 2% after Reuters reported that several OPEC+ members suggested accelerating the oil production increase for the second consecutive month in June, citing sources familiar with the group’s discussions.
Kazakhstan, which produces around 2% of the world’s oil output and has consistently exceeded its quota for the past year, stated that it would prioritize national interest over OPEC+ when deciding its pumping levels, according to Reuters the previous day.
“Such a challenge implies a looser oil balance but, more importantly, it means Kazakhstan de facto ceases to exist as an OPEC+ member, although it remains in the alliance for now,” said Tamas Varga, an analyst at PVM.
Previous Disputes Among OPEC+ Members
There have been previous disputes among OPEC+ members regarding production quota compliance, one of which led to Angola’s departure from the group in 2023.
“A new disagreement among OPEC+ members is a clear downside risk, as it could result in a price war,” analysts at ING warned.
Supportive Trade Talks Between US and China
Positive signals that the United States and China might be nearing trade talks also supported oil prices.
Key Questions and Answers
- Q: What is OPEC+? A: OPEC+, or the Organization of the Petroleum Exporting Countries Plus, is an grouping of oil-producing nations, primarily led by OPEC members and including other countries such as Russia.
- Q: Why is Kazakhstan’s stance significant? A: Kazakhstan’s decision to prioritize national interest over OPEC+ could potentially weaken the alliance and lead to a looser oil balance, as suggested by analyst Tamas Varga.
- Q: How do trade talks between the US and China impact oil prices? A: Positive signals from US-China trade talks can support oil prices, as it may reduce geopolitical uncertainties and contribute to a more stable market environment.
