Delegates and analysts told CNBC that expectations indicate that the organization of the Petroleum Exporting Countries and its allies OPEC may extend the current oil production cuts at their meeting to be held on June 2 next.
Four OPEC delegates made it clear that crude oil production cuts of 2.2 million barrels per day are likely to continue further, with one delegate stating that the group aims to avoid any shifts in its approach as prices in the market appear to be fairly stable. Another delegate noted that there may be a tightness in the market in the second half of 2024, but noted that concerns about demand persisted only until recently.
An OPEC delegate also said that the unexpected death of Iranian President Ebrahim Raisi, we believe, does not pose a risk to the market, especially considering that his successor, who is likely to follow the same policy as Raisi, is not.
I think the geopolitical risks have receded somewhat, as the tension between Israel and Hamas will support prices only if it has a clear impact on oil production or flows, which may come in the form of the closure of the Strait of Hormuz, or attacks on oil infrastructure in the region.
