OPEC+ to stand pat, for now

OPEC+ is set to meet next Tuesday, when we expect the group to agree to continue with its incremental increases in production through to July. We think it unlikely that the group will address the thornier issue of the ongoing rise in Iran’s production and the risk of a more rapid upturn in supply if a new nuclear deal is reached with the US. Presumably, if a deal is reached, OPEC+ members will seek to bring Iran into the quota system at some point, but the timing and size of Iran’s quota will probably prove contentious. Otherwise, it has been a relatively quiet week in commodities markets, which may reflect the ongoing uncertainty about the outlook for demand. The vaccine rollout in the US has been impressive but the recent economic data have been a little subdued and the scale of the hit to India’s commodity consumption in the wake of the latest wave of the virus there is still unclear. More positively, China’s manufacturing PMIs are due to be published early next week and they could give a fillip to metals prices if, as we think likely, they ticked up in May.