OPEC sees lower supply growth from rivals, keeps demand outlook steady
The Organization of the Petroleum Exporting Countries trimmed next year's forecast for supply growth from the U.S. and other rivals while keeping its oil demand expectations unchanged as it continues to ramp up production.
The Vienna-based cartel expects supply from producers outside of the wider OPEC+ alliance to rise by 730,000 barrels a day in 2026, down from 800,000 barrels a day previously. U.S. oil output is projected to grow by 210,000 barrels a day, compared with previous expectations of a 280,000 barrels-a-day increase, reflecting lower capital spending and a slowdown in drilling activity.
In afternoon trading in Europe, Brent crude, the international energy benchmark, stood above $73 a barrel, while the U.S. oil gauge West Texas Intermediate traded at around $72 a barrel.
Oil prices spiked last week after Israel launched a series of strikes against Iran, shaking global markets and stoking fears of a regional conflict that could severely disrupt global energy flows. OPEC's latest report made no direct reference to the current conflict between Israel and Iran.
The market's greatest fear is that Iran could close the Strait of Hormuz, a vital shipping chokepoint through which roughly a third of the world's oil passes. Analysts say any disruption to supply could prompt OPEC+ to adjust its strategy and bring back supply more quickly than anticipated.
But the cartel–which sits on more than 5 million barrels a day of spare capacity–appears to be in wait-and-see mode and hasn't made any plans to hold an extraordinary policy meeting.
OPEC+'s next meeting is currently scheduled for July 6, when members are expected to agree to another large supply increase as part of efforts to regain some market share and rein in overproducers. At the end of May, the cartel and its allies–which pump more than half of the world's crude oil–decided they will increase supply by 411,000 barrels a day for a third straight month in July.
Meanwhile, OPEC's global oil-demand growth forecast remained broadly unchanged at 1.29 million barrels a day this year and 1.28 million barrels a day the next, supported by strong air-travel demand and healthy road mobility.
OPEC also kept its estimates for global economic growth steady, saying that while trade-related distortions are expected to ease, some tariff risks might persist.
Overall OPEC crude-oil production rose by 183,000 barrels a day to 27.02 million barrels a day last month, driven by Saudi Arabia. The total production of countries participating in the Declaration of Cooperation–or DoC, the cartel's formal name for OPEC+–increased by 180,000 barrels a day to 41.23 million barrels a day.
Output from Kazakhstan, which has repeatedly created tensions within the group by exceeding its production quotas, fell by 21,000 barrels a day last month to 1.80 million barrels a day.
Write to Giulia Petroni at giulia.petroni@wsj.com
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