OPEC+ ministers are set to meet on Thursday and are expected to agree to raise production targets by 432,000 barrels per day (bpd) for June, three OPEC+ delegates told Reuters.
Under a deal reached in July last year, the group is set to increase output targets by 432,000 bpd every month until the end of September, to unwind its remaining production cuts.
In late March, it agreed to go ahead with the planned output increase for May.
The OPEC+ meeting this week comes against the backdrop of a major announcement from the European Union which on Wednesday proposed a phased oil embargo on Russia in its toughest measures yet to punish Moscow for its war in Ukraine.
Oil prices jumped by more than 4% on the announcement, with Brent crude rising to near $110 a barrel.
According to an internal report seen by Reuters, OPEC+ expects supply to exceed demand by 1.9 million bpd in 2022, 600,000 bpd higher than a previous forecast.
The report, prepared ahead of a meeting of the OPEC+ Joint Technical Committee meeting taking place on Wednesday, also sees OECD oil stocks slightly exceeding the 2015-2019 average in the fourth quarter.
The revision reflects a weaker oil demand growth forecast adopted by the Organization of the Petroleum Exporting Countries (OPEC) in its April oil monthly report.
OPEC now expects 2022 world oil demand to expand by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast.
The group cited the impact of Russia’s invasion of Ukraine, rising inflation as crude prices soar, and the resurgence of the Omicron coronavirus variant in China as reasons for the revision.
OPEC+ expects oil production from non-OPEC countries in the alliance to average 18.2 million bpd, the data showed, a 600,000 bpd downward revision from the previous forecast, partly reflecting lower Russian supplies.
Russia’s own forecasts showed output may fall by as much as 17% in 2022, an economy ministry document seen by Reuters showed.
According to the document, Russian oil output may decline to between 433.8 million and 475.3 million tonnes – equivalent to between 8.68 million and 9.5 million barrels per day – in 2022, from 524 million tonnes in 2021.