Middle East oil giants say OPEC+ supply increase is necessary

On Wednesday, senior officials from the three leading OPEC producing countries—Saudi Arabia, the United Arab Emirates, and Kuwait—said the production increases delivered by the alliance were necessary.

According to UAE Energy Minister Suhail Al-Mazroui, even with the recent rump-up in global oil supply, there has been observed no significant growth in reserves. Thus, he believes, the increase in supplies was needed for the market. His words were supported by representatives of oil companies from Saudi Arabia and Kuwait.

One of the main signs of market tightness is a significant reduction in crude oil stocks in the key US hub in Cushing, Oklahoma. In early July, the reserves there fell to the lowest seasonal level since 2014. Spreads also signal tight oil market environment in the coming weeks.

This week, oil prices are showing some gains. As Bloomberg notes, this indicates a calm market reaction to increased crude supplies. However, despite the current tight balance, forecasters quoted by the agency admit that at the end of the year, supply growth may outpace demand.