Oil prices jumped after OPEC’s decision to maintain production growth
2 June 2025 08:47
World oil prices jumped sharply by $1.5 a barrel on Monday after the Organization of the Petroleum Exporting Countries (OPEC) decided to increase production in July by the same amount as in the previous two months. This decision came as a relief to the market, which had been expecting a more significant increase in production, "Komersant Ukrainian" reports citing Reuters.
Price dynamics on world markets
According to OilPrice.com, Brent crude oil futures rose by $1.50, or 2.39%, to reach $64.28 per barrel as of 08:30 Kyiv time, after closing down 0.9% on Friday. US crude oil WTI (West Texas Intermediate) was trading at $62.50 per barrel, up $1.71 or 2.81% from the previous session, when it was down 0.3%.
It is worth noting that both oil contracts lost more than 1% of their value last week, which makes today’s growth particularly noticeable against the background of previous losses.
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OPEC’s decision to increase production
On Saturday, the Organization of the Petroleum Exporting Countries and their allies decided to increase production by 411 thousand barrels per day in July. This is the third month in a row that the group, known as OPEC, has increased production by the same amount in an effort to regain market share and punish member states that exceed their quotas.
However, analysts had expected the group to consider a more significant increase in production, so maintaining the same pace came as a surprise to the market.
“If they had gone for an unexpected larger increase, it would have been a really ugly opening on Monday,”
– analyst Harry Chilingurian of Onyx Capital Group wrote in a post on LinkedIn.
Oil traders noted that the increase in production by 411 thousand barrels per day had already been priced into Brent and WTI futures prices, so there was no sharp negative market reaction.
“The main motive is focused on punishing OPEC members, such as Iraq and Kazakhstan, who consistently produce in excess of their committed quotas,”
– noted the Commonwealth Bank of Australia in a research note on Monday.
The situation with overproduction by some members of the alliance remains an urgent problem. In particular, Kazakhstan has informed OPEC that it does not intend to cut oil production, according to a Thursday report by the Russian Interfax news agency, which cited Kazakhstan’s deputy energy minister.
Forecasts for August
Goldman Sachs analysts expect OPEC to make a final production increase of 0.41 million barrels per day in August.
“Relatively tight spot oil market fundamentals, above-expectations global economic activity data, and seasonal summer support for oil demand suggest that the expected slowdown in demand is unlikely to be sharp enough to stop the production increase when the decision on August production levels is made on July 6,”
– the bank said in a note dated Sunday.
US fuel market
Meanwhile, low levels of US fuel inventories have raised concerns about supply ahead of the hurricane season, analysts say.
“More encouraging was a huge surge in implicit gasoline demand ahead of what is seen as the start of the US road trip season,”
– ANZ analysts said in a note, adding that the rise of nearly 1 million barrels per day was the third largest weekly increase in three years.
Traders are also closely watching the impact of lower prices on US crude oil production, which hit an all-time high of 13.49 million barrels per day in March.
Last week, the number of active oil rigs in the United States fell for the fifth consecutive week, decreasing by four units to 461, the lowest level since November 2021. This was reported by Baker Hughes in its weekly report on Friday.
Such dynamics may indicate a gradual decline in investment by US producers in new projects due to relatively low oil prices, which could affect future production in the country.
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