Oil prices to rise a little further as OPEC+ hold the line

In what proved to be one of the shortest OPEC+ meetings ever, the group agreed this week to stick to its previously planned increase in output in July. Oil prices rose sharply on the back of the announcement, with Brent now trading above $70 per barrel. However, OPEC+ members seemingly didn’t discuss how to deal with the prospect of additional supply from Iran, which we suspect will be a contentious topic at future meetings. Nevertheless, our central forecast is that OPEC+ maintains a gradual approach to relaxing output cuts, which should keep the oil market in a deficit in the near term and push prices a little higher. Turning to next week, we expect China’s May trade data (Monday) to show a further decline in import volumes of industrial commodities, albeit from historically high levels. This would add to concerns around the strength of China’s metals demand which contributed to a fall in the prices of most industrial metals this week, with copper slipping back below $10,000 per tonne.