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OPEC+ Quota Hikes Fail to Spur Expected Output Rise

Survey data show Saudi Arabia raised May output by 130,000 barrels per day despite OPEC+ quotas remaining unmet with non-OPEC+ supply surging toward a surplus.

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Overview

  • OPEC+ increased collective production quotas by about 1 million barrels per day from March through June without a detectable rise in actual output, Morgan Stanley analysts report.
  • OPEC’s May production increase of 150,000 barrels per day fell well short of the 310,000-barrel-per-day unwind planned under the OPEC+ agreement, according to a Reuters survey.
  • Saudi Arabia contributed the largest single gain with a 130,000-barrel-per-day boost in May but still underdelivered against its quota target.
  • Morgan Stanley forecasts OPEC+ will add roughly 420,000 barrels per day between June and September, a pace unlikely to close the current output gap.
  • Non-OPEC+ production growth is seen at 1.1 million barrels per day this year, outpacing demand growth of 800,000 barrels and pointing to a looming surplus.