Aldo Spanjer, the head of energy strategy at BNP Paribas (EPA:BNPP), has highlighted the significant uncertainties surrounding the oil market, stemming from OPEC+’s anticipated production increase in June. Furthermore, there are growing apprehensions about the cohesion within the OPEC+ alliance, which could introduce substantial downside risks to the oil market.
The situation has been compounded by reports indicating that Kazakhstan intends to prioritize its national interests over conforming to the established production quotas. As a result, BNP Paribas does not foresee Kazakhstan reducing its output to counterbalance any overproduction.
“This situation could potentially lead to a more substantial rise in OPEC+ supply in June, which may contribute to short-term market weakness,” Spanjer commented. Additionally, he noted, “We perceive this as the predominant bearish factor in the market, with increasing risks to the unity of the OPEC+ coalition.”
BNP Paribas projects the price of Brent crude oil to be approximately $60 per barrel in the second quarter, climbing to $70 per barrel in the third quarter. It is anticipated that the international oil benchmark price will average around $65 per barrel by the close of the year. At present, Brent crude is trading slightly lower by 0.2% at $66.74.
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