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Heading into Friday's much anticipated OPEC meeting in Vienna, the focus has shifted from (declining) global demand-side concerns to specific supply-side actions, and while it is broadly expected to conclude with an oil production increase -  the first since the historic production cut agreement in late 2016, is set to be contentious with members Iran, Venezuela and Iraq arguing against a hike proposed by Saudi Arabia and non-member Russia.

Here is a brief summary of what to expect:

  • Weekend reports noted that Russian Energy Minister Novak stated that, in conjunction with Saudi Arabia, OPEC and non-OPEC countries will discuss raising oil output by 1.5MMb/d in Q3 only.
  • Meanwhile, Iran said on Sunday that 3 OPEC members - Iran, Iraq and venezuela - would veto the proposed increase.
  • That counters Saudi Arabia’s oil minister who said on June 14 that it’s “inevitable” that OPEC and its allies will decide to boost output gradually.
  • Saudi officials have been discussing different scenarios that would raise production of OPEC and allied producers by between 500k b/d and 1m b/d, Bloomberg reported last week.
  • However, countering this, a Monday morning report from Bloomberg noted that OPEC is said to discuss an output hike of only 300k-600k bpd, while Saudi and Russia are said to work on making the oil alliance permanent. Furthermore, OPEC members are said to be looking for a compromise to overcome the Iran dissent
  • According to a Bloomberg survey, OPEC and allies will probably boost output:
    • 18 out of 31 analysts predicted an increase in the June 12 poll
    • Most predicted +500k b/d; range was +180k to +1m
  • Bloomberg tanking-tracking analysis on June 15 showed Iranian oil exports dipped in the first half of June, a sign that President Trump’s re-imposition of sanctions may be deterring buyers

In terms of Vienna logistics:

  • OPEC’s International Seminar is Wednesday, Thursday, with participation of all OPEC ministers, CEOs of Sonangol, BP, Total, among others. Click here for program.
  • OPEC’s formal, policy-setting ministerial meeting is on Friday, including a session that involves certain non-OPEC nations.

Finally, with Trump making increasingly louder noises that he won't accept higher oil prices (most recently last week), and warning OPEC not once but twice on Twitter to produce more, it is no surprise that WTI dropped to its lowest price in the past month in the overnight session, although it has since rebounded modestly on hopes the OPEC production cut could be smaller than expected.