Oil prices hit 2018 highs as demand outstrips supply. But on Thursday, during their meeting, OPEC may increase output, which will help solve the shortage in supply.
Bloomberg said the coalition may raise oil production in August to 550,000 barrels per day. However, this is not enough as it is only a quarter of the global deficit that OPEC expects next month.
In fact, at the moment, physical oil markets are already suffering with insufficient supply.
But Saudi Arabia remains cautious about any increase in output, arguing that Iran might raise its exports once a nuclear deal is signed and US sanctions are lifted. However, the recent air strikes made by US to Iran-backed militias may complicate the signing of the deal.
So far, the state of the oil market indicates tighter supply, so Brent futures for August rose 81 cents higher. At the beginning of this month, the spread was 40 cents.
Oil surplus also continues to decline, dropping by 17% last week, which is the lowest level since April 2020.