Opec+ to consider further oil output increase for June

• Eight Opec+ countries meet on May 5
• Iraq has said it will curb output
• Oil prices fall

Several Opec+ members are to suggest the group accelerates oil output hikes in June for a second consecutive month, as a dispute worsens between members over compliance with production quotas.

Oil prices hit a four-year low in April, dragged down by a US-China trade war and an unexpected decision by Opec+ to increase output by 411,000 barrels per day of oil in May – which was three times more than the group originally planned.

Without specifying how many countries, sources told Reuters that some wanted to increase output by a similar volume to the May increase.

Eight Opec+ countries will meet on May 5 to decide the June output plan.

The Organization of the Petroleum Exporting Countries and the Saudi Arabian authorities did not immediately respond to Reuters’ requests for comment.

Oil prices, which were up in early trade on Wednesday, later turned negative, with global benchmark Brent crude trading down more than 2 percent to less than $66 a barrel.

Saudi Arabia pushed for the speedier output increase in May after Kazakhstan and Iraq angered the kingdom by producing well above quotas, Opec+ sources have said. A meeting of senior Opec+ ministers on April 5 said compliance had to improve.

Kazakhstan, however, said it would prioritise national interests over those of Opec+ when deciding on output levels.

The Kazakh energy minister told Reuters on Wednesday that the country was unable to curtail the output of independent oil majors on its territory and would not shut down its own oilfields as that would damage their future production.

“Kazakhstan’s statement cements our view that Opec+ may implement another accelerated three-month unwind again in the May meeting and it may continue again in July and through the summer,” said Amrita Sen, co-founder of Energy Aspects.

Overproducers

Kazakh oil output fell in the first two weeks of April by 3 percent from the March average but was still above the Opec+ quota it had pledged to meet after months of overproduction.

Iraq, the group’s largest overproducer, also said it will curb output, but has so far increased exports in April month-on-month, data from industry monitor Kpler showed.

Not all of the eight Opec+ countries, which are raising production as part of the winding down of earlier voluntary output cuts, support speedier output increases.

Some countries, including Russia, prefer to stick to the earlier approved slower monthly output hikes of 135,000 bpd to avoid a price crash, two separate Opec+ sources said.

The Opec+ production increases have followed calls from Donald Trump for Opec to lower oil prices and his return to his policy of “maximum pressure” on Iran whose oil exports Washington wants to reduce to zero.

• Amena Bakr: Oil markets are vulnerable to Trump’s turbulence
• Frank Kane: Despite Trump, China still has a big thirst for Gulf oil
• Saudi Arabia and UAE to cut oil output in Opec’s latest plan

Trump is due to visit Saudi Arabia in May and says the kingdom is one of the United States’ most important allies in the Middle East.

The May and potential June hikes are part of a plan by Russia, Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, Algeria, Kazakhstan and Oman to gradually unwind their most recent output cut of 2.2 million bpd.

Opec+ also has 3.65 million bpd of other output cuts in place until the end of next year to support the market.