(Bloomberg) — OPEC kept oil production steady in June as the cartel pressed on with an accord aimed at shoring up a fragile global market.
The Organization of Petroleum Exporting Countries pumped an average of 28.57 million barrels a day, a modest increase of 80,000 a day from May, according to a Bloomberg survey. June was the second month of a round of supply curbs that some members had put in place to offset shaky economic growth.
Output ought to decline in July as Saudi Arabia, OPEC’s biggest producer, deepens its supply reduction with a unilateral cutback of 1 million barrels a day. The kingdom on Monday announced this measure will be extended into August. Russia, fellow leader of a wider coalition known as OPEC+, also vowed to pare supplies.
Despite initial predictions for a rally this year, oil prices have instead sagged about 12% so far in 2023 amid a lackluster post-pandemic recovery in China and fears that rising interest rates will trigger a global recession. futures are trading near $75 a barrel in London.
While the price retreat offers relief for inflation-wracked consumers in the US and elsewhere, it puts financial pressure on Riyadh and its partners in oil-producing nations. Saudi Arabia needed prices of more than $80 a barrel even before its latest wave of output curbs to balance its budget, according to the International Monetary Fund.
The kingdom held supplies steady last month at 9.96 million barrels a day. Overall output from OPEC’s 13 members was largely unchanged as reductions by the United Arab Emirates and Iran were offset by shallow increases in a number of countries, including Nigeria and Libya.
Saudi Arabia said its statement Monday that further extensions are possible, and Energy Minister Prince Abdulaziz bin Salman has promised to keep traders in “suspense” on future plans. The prince will address an energy conference hosted by OPEC in Vienna on Wednesday.
Based on its schedule of reviewing the oil market every two months, an OPEC+ monitoring committee is likely due to convene in early August. The group’s next formal meeting is slated for late November.
Bloomberg’s survey is based on ship-tracking data, information from officials and estimates from consultants including Kpler Ltd., Rapidan Energy Group and Rystad Energy.
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