Members of the Organization of Petroleum Exporting Countries (OPEC) are scheduled to meet on the 1^st of July 2021, for the 18th OPEC and Non-OPEC Ministerial Meeting. This meeting is set to review the latest developments in the oil market and make critical decisions to set the tone for the remainder of the year. High on the agenda will include the rise in Covid-19 cases – with emphasis on the Delta variant – and declining stockpiles in the US.

OPEC+ is expected to discuss a potential extension of its current oil supply deal beyond April 2022, which has been in place since the April-2020 summit at which OPEC+ nations agreed to curtail supply. Notably, member countries had withheld 2.3bn barrels of crude as of Jan-2021. OPEC+ overall compliance has been substantial, with member countries reaching c.122.0% compliance in May-2021(Nigeria achieved full conformity January 2021), according to OPEC+. The return of economic activities and OPEC+ compliance with the Declaration of Cooperation (DOC) have yielded positive results and supported prices in the crude market. Ahead of tomorrow’s meeting, we maintain optimism for recovering oil prices (Brent Crude has soared 45.1% to $75.16 per barrel in H1-2021). Our positive outlook is predicated on hopes of sustained demand for energy following the strong vaccination boost in the half year.

However, given the recent increase of Covid-19 cases, which has caused some countries to impose travel restrictions in certain parts of the world, potential downside risks remain. Considering this, as well as dropping stockpiles in the US, we do not expect any surprises from OPEC+ at the meeting given OPEC+’s cautious approach to supply since the outbreak of the pandemic.