
Trader Meeting Notes: OPEC-alypse Now
The price volatility noted in the front-month Brent futures contract has calmed this week, with prices moving sideways. We saw some weakness on 23 Apr following reports of several OPEC+ members suggesting a second consecutive accelerated oil output increase in June. However, prices only dipped from $68.65/bbl to $65/bbl on this news and have since risen to $66/bbl at the time of writing on 24 Apr. This consolidation in price action may indicate that the market may be opting to sit on the sidelines while ascertaining the developments in the oil industry and the larger macroeconomic backdrop. Uncertainty continues from burgeoning trade talks between the US and China, with Treasury Secretary Scott Bessent stressing that the trade standoff cannot be sustained. Until we await further clarity on this development, news on additional accelerated oil output rises would put further pressure on oil prices. Moreover, Kazakhstan, which produces about 2% of global oil output, has said it will prioritise national interests over OPEC+ when deciding production levels, which may possibly cause friction amid the OPEC+ members, adding to the uncertain environment. Some support for oil prices may emerge amid new US sanctions on an Iranian LPG magnate. However, the US and Iran are reportedly planning talks to negotiate a nuclear deal. Should the two parties successfully broker such a deal, it could tip oil prices right off the edge.