OPEC+ Said to Boost Output. Is an Oil Price Cool-Down Imminent, or Is There a Reversal?

Tradingkey - It has been nearly three months since the outbreak of the Iran war, yet oil prices have fluctuated at high levels, with WTI crude hovering around $100 and Brent crude around $105. The core reason for oil prices maintaining current levels is a market consensus: while the escalation of the situation in the Strait of Hormuz has impacted the global crude oil supply side, it has also dampened demand. The interplay between supply and demand has created a delicate dynamic balance.

Morgan Stanley recently released a report noting that while net exports from major Middle Eastern crude exporters have declined, other oil and gas producers led by the United States have significantly increased export supplies. Meanwhile, major importers such as China have reduced their import volumes accordingly. The combination of these factors has contributed to the current equilibrium in the crude oil market.

However, the latest reports suggest that OPEC+ may intend to adjust its production policy. According to Reuters, citing four anonymous sources, seven core OPEC+ producers will meet on June 7 and are expected to reach a consensus on July production targets, with a preliminary planned increase of approximately 188,000 barrels per day. The sources also emphasized that a final decision has not yet been formally made.

The rumor of a production increase, which could have potentially disrupted the supply-demand balance, failed to create significant waves in the crude oil futures market. As of press time, WTI crude futures rose 1.4% to $97.7 per barrel, while Brent crude futures gained 1.87% to $104.5 per barrel.

The core reason for the muted market reaction stems from a false report the previous day regarding a final agreement between the U.S. and Iran. On May 21, Saudi Arabia's Al Arabiya TV leaked what was claimed to be a "final draft" of a U.S.-Iran agreement. The document listed nine terms, including a comprehensive ceasefire, guaranteed freedom of navigation in the Strait of Hormuz, the gradual lifting of U.S. sanctions, and the start of follow-up negotiations within seven days, though it made no mention of the nuclear issue.

Following the news, oil prices plummeted while U.S. stocks surged. However, less than eight hours later, Al Arabiya issued a full retraction, explicitly stating the report was "fabricated." Consequently, oil prices rebounded quickly, and gains in U.S. stocks narrowed significantly.

On the other hand, even if OPEC+ successfully implements the production hike in July, the UAE's previous decision to exit the alliance will limit the actual scope of monthly increases. Analysts point out that the UAE's departure has weakened the alliance's overall ability to regulate the global crude market, meaning the organization's influence over the oil market is no longer what it once was.

Bloomberg's latest market survey provides a clear guide for medium-to-long-term crude oil price trends. The survey, covering 126 institutional asset managers and energy industry veterans, shows a consensus expectation for Brent crude between $81 and $100 per barrel over the next 12 months. Regarding the risk premium, 67% of respondents believe geopolitical factors will continue to support oil prices over the next 3 to 5 years, with a median premium of $5 to $15 per barrel; an extreme premium exceeding $20 has not reached a market consensus.

Regarding the supply-demand adjustment mechanism, the market believes that self-regulation on the demand side will be the primary force offsetting supply gaps, taking priority over trade flow restructuring, OPEC+ policy intervention, and strategic reserve releases.

Bloomberg Intelligence analysts believe these results reflect a more rational pricing logic in the crude oil market: geopolitical conflicts bring persistent premiums rather than structural price hikes, and supply-demand fundamentals remain the core variable determining long-term oil prices.