Russia’s Deputy Prime Minister Alexander Novak highlighted the importance of moving forward with OPEC+ plans to boost oil production. He pointed out that summer demand justifies bringing some of the 2023 voluntary cuts back into the market to balance supply. Eight OPEC+ members, including Saudi Arabia and Russia, are set to end cuts of 2.2 million barrels per day (bpd) from April to July. While Russia initially suggested pausing the increase for July, they ultimately agreed to a boost of 411,000 bpd. Regarding tensions in the Middle East, Novak recommended that OPEC+ stick to its current course to prevent market instability caused by speculation. Saudi Energy Minister Prince Abdulaziz echoed this approach, stating that the group would concentrate on real supply disruptions instead of speculative concerns. This plan is a careful and staged reduction of previous supply limits by major oil producers. Novak, as a key spokesperson for the group, confirmed they are now shifting towards a slightly more open supply strategy due to what they consider a strong seasonal rise in global demand. These output increases are not random; several members, like Riyadh and Moscow, are coordinating them in stages, aiming to align more smoothly with current consumption patterns. The planned 2.2 million bpd increase over four months follows a period of reduced output to stabilize falling prices. Although there was some initial hesitation from Moscow regarding the July increase, the agreement on the extra 411,000 barrels suggests a broader consensus has formed. In times of geopolitical tension, especially with nations in the Gulf region, it’s common for reactions to be hasty before the impact on supply can be fully understood. However, this group is resisting that impulse; their thinking is structured and deliberate. Abdulaziz’s message was clear—no sudden changes based on fear or assumptions. They won’t adjust supplies unless there are tangible logistical issues. So, what does this mean for us? This creates a clear pace for output levels—measured, transparent, and spaced out to reduce uncertainty about supply. For those looking into contracts in the coming weeks, particularly in energy-linked derivatives, this establishes a solid baseline. In simple terms, it lessens the chances of erratic shifts caused by uncertainty among producers. With this framework in place, market reactions can rely more on factual economic data and actual supply flows. Pricing models should adapt to this change. The risk of unexpected OPEC+ interventions seems lower in the near term. Focus can now shift back to demand indicators and global supply developments. The sudden price premiums previously anticipated for producer moves might now seem unwarranted, and positions could be adjusted accordingly. It’s reasonable to start modeling more stable price structures for the summer. We should also consider how this clarity affects overall market sentiment. Markets benefit from predictability, and with major players setting volume forecasts proactively, there’s less temptation for emotional pricing. Unless there are unforeseen disruptions in shipping or production, there’s a reliable framework to follow each week. As a result, oil volatility product open interest may weaken slightly, as the perceived chances of unexpected supply events decrease. We see a stronger case now for using medium-term strategies in stable range setups, or even calibrated diagonal spreads, rather than aggressive bets that rely too heavily on production headlines. That excitement has cooled—for now. What we should monitor now is whether these production capacity changes keep pace with the seasonal uptick in buying. If production ramps up too quickly and demand doesn’t match, it could lead to an inherent cap on prices. The July figures will be critical—not just milestones but indicators of whether the group successfully balanced supply or risked mild oversupply. Sharp changes in those figures could add value to relative spread moves, especially in crack or calendar differentials. If anything deviates from this plan—such as a stall in capacity increases—we would expect to see a swift shift in volatility expectations and possibly a change in inventory premium responses in future pricing. For now, though, the sequence they’ve laid out provides clarity and reduces our exposure to uncertainties.

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