OPEC Awaiting Meeting with Producers Before Deciding on Supply

OPEC is in the dark on the oil supply outlook for the second half of this year, with Iranian and Russian outages looking increasingly significant but Saudi Arabia reluctant to pump more due to fears of a price crash, sources in the organization said.

An oil contamination forced Russia to halt flows along the Druzhba pipeline, a key conduit for crude into Eastern Europe and Germany, in April. The suspension left refiners scrambling to find supplies and its duration is unclear.

Iran’s oil exports are likely to drop further in May as the United States tightens the screw on Tehran’s main source of income. Shipments from Venezuela, also under U.S. sanctions, could fall more in coming weeks.

The dearth of information is a headache for OPEC and allies led by Russia, which gather in June to decide whether to renew a supply-cutting deal. A panel of ministers meets on May 19 in Saudi Arabia to discuss the market and make recommendations.

Two delegates from the Organization of the Petroleum Exporting Countries said the Russian outage, on top of Iranian and Venezuelan export losses, would be discussed at the Jeddah meeting and it seemed more than a short-term technical glitch.

via Reuters

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