Wood Mac: Expect moderate action from OPEC

Ministers from the Organization of Petroleum Exporting Countries arrived this week in Vienna for their regular meeting. At issue this week is a global market in relative balance between supply and demand for oil. Non-market issues like violence in Libya, sustained political issues in Venezuela, and future sanctions pressure on Iran raise questions about market balance.

Saudi Arabia, the de facto leader of OPEC, has joined Russia, the largest non-member state contributor to an effort to keep the market balanced, in hinting more oil will come on the market this year. Iran, the main political advisory of Saudi Arabia, complained of unilateralism from Riyadh, stating no new barrels are needed. The United States, Iran's opponent and Saudi ally, has weighed in as President Donald Trump remains keen to protect temporary consumer tax relief from higher fuel prices.

Ann-Louise Hittle, an oil analyst at consultant group Wood Mackenzie, predicted the OPEC-led effort could result in anything from another 1.5 million barrels per day on the market, which would push oil prices considerably lower, to a standstill on policy.

"Balancing these different factors, if OPEC and Russia were to agree on a production increase, we think it would likely be a moderate one, which would avoid a sharp downward price adjustment, yet provide a response to U.S. pressure for more supply," she said in analysis emailed to UPI.

That aligned more with a consensus agreement that Hittle expects will result in about a half million extra barrels per day on the market in the second half of the year. If that's the case, Wood Mackenzie expects the price for Brent crude oil will average $71 per barrel this year.

Brent, the global benchmark for the price of oil, was closer to $75 per barrel early Wednesday. It touched $80 per barrel earlier this year, a multi-year high.

Not included in Wood Mackenzie's analysis was the impact of lingering trade disputes between the United States and China. An exchange of threats on tariffs on billions of dollars of goods could spill over to the broader global economy and impact demand.

Christina Lagarde, the director of the International Monetary Fund, warned last week that "nobody wins" in a trade war.