Oil traders will be waiting to see what the world's most powerful oil producer Saudi Arabia — likened to "Superman" by the respected oil market expert Helima Croft — says and does at the forthcoming meeting of OPEC and non-OPEC producers on June 22.
"With unplanned outages escalating, geopolitical risks rising, and U.S. shale production facing infrastructure bottlenecks, Saudi Arabia is once again back in the driver's seat exerting significant influence over the oil market in 2018," Croft, the global head of commodity strategy at RBC Capital Markets, said Thursday.
"All eyes are on what course of action it will call for at the June 22 OPEC meeting in Vienna," she added in a note entitled "OPEC Watch List: Waiting for Superman."
OPEC and a group of non-OPEC producers, including Russia, are currently adhering to a deal struck in November 2016 to curb oil production (by about 1.8 million barrels a day) in a bid to support prices.
The strategy has worked with prices having risen from a low of around $26 a barrel in January 2016 to currently trade at around $76 for Brent and $66 for West Texas Intermediate (WTI).
Now, there are growing tensions over the cuts and pressure is growing on OPEC — from the likes of President Donald Trump — to increase supply to prevent prices from rising too steeply.
As such, the June 22 meeting is expected to be dominated by arguments over whether to increase production or maintain supply as it is. Saudi Arabia and Russia are reportedly ready to increase oil output while others like Iran and Venezuela are against such a move and want to maintain supply at the current level.
There are concerns that oil supplies from Venezuela, which is experiencing economic turmoil, and Iran, which will see a re-imposition of U.S. sanctions following the U.S.' withdrawal from a nuclear accord, could decline, prompting a supply shortage and further upward pressure on prices.