Oil ministers from OPEC+ members agreed on another big increase in production targets for July. But is there room for those barrels without crashing prices?

A third straight boost of 411,000 barrels a day will see the group adding a combined 1.37 million barrels to supply between March and July — at least in theory.

Not everyone agrees there’s enough room for this extra oil, even within the group itself. Russia wanted to pause the increases to assess the impact of the hikes already made.

Moscow saw the price of its key Urals export grade tumble below $50 a barrel in early May, recovering to slightly above that level in the second half of the month. And, unlike Saudi Arabia, it doesn’t benefit from big increases in its production target.

While the kingdom’s allowance will rise by 556,000 barrels a day during the period, Russia’s increases by just 150,000 barrels after taking into account the deeper compensation cuts it promised to offset past overproduction.

But the real cumulative increase in group production is likely to be much smaller than the headline figure, with perhaps as little as half actually reaching global markets.

Some of the nations permitted to produce more are already pumping as hard as they can and, in the case of Kazakhstan, are already well above their July allocation.

Much of the extra expected from Saudi Arabia will be used locally to generate electricity for the summer surge in air conditioning, which could soak up more than 80% of its new allocation.

South Sudan, where production is recovering after a key export pipeline was repaired, and Libya, which is under threat from rising internal unrest, create other supply uncertainties.

Analysts at the Organization of the Petroleum Exporting Countries see the market short of about 1 million barrels a day of supply in the third quarter — even with Kazakhstan’s cheating — and say their counterparts at the International Energy Agency underestimate demand.

That view was given some credence last month when the Paris-based agency increased historical demand estimates, wiping out all the stockbuilds it had previously seen for the past three years.

Analysts outside OPEC, including Goldman Sachs Group Inc. and Morgan Stanley, see the group continuing to raise output targets aggressively, keeping Brent crude at, or below, $60 a barrel in the second half of this year.

–Julian Lee, Bloomberg News