**OPEC+ to Adjust July Production Targets Amid Modest Market Dynamics**

OPEC+ is set to modestly elevate their July production targets by 411,000 barrels per day (bpd), though actual increases are likely to be less due to necessary adjustments for previous overproduction and operational difficulties in some member countries. This decision is expected as global oil demand remains consistent, with projections from Standard Chartered suggesting a growth of 1.17 million bpd in 2025.

Commodity strategists at StanChart anticipate a balanced oil market in the second and third quarters of 2025, even if all voluntary cuts by OPEC+ are lifted. The eight OPEC+ nations responsible for these voluntary cuts are slated to convene on Friday to deliberate on the production strategy for July. The strategists project that the group will likely add another 411,000 bpd to their July targets, cumulatively easing restrictions by 1.4 million bpd. However, this target increase has not translated into expected output levels, as production issues and adjustments for overproducing members temper the rise.

StanChart estimates that OPEC+ total crude output in March was 40.99 million bpd, the last month before the current unwinding began, and this is likely to rise to 41.90 million bpd in July, if the 411,000 bpd increase proceeds. Effectively, this means the group will add only 905,000 bpd to daily production, despite the 1.4 million bpd relaxation in targets.

StanChart forecasts the call on OPEC+ crude oil and inventories to be approximately 42.1 million bpd in the third quarter, a notable increase from the first quarter. This figure aligns with the projected global market demand growth of 1.17 million bpd year-over-year in 2025, despite some analysts’ more conservative estimates.

Despite overall stability, StanChart warns that the eight OPEC+ producers could potentially accelerate the unwinding to more than 411,000 bpd if key overproducers like Kazakhstan and Iraq do not adhere to agreed production cuts. Current sentiment suggests the group will maintain its planned trajectory, as market reactions to recent increases in May and June have not been significantly negative.

Bearish trends still dominate oil markets, with unusual inventory builds and soft demand metrics exerting downward pressure. According to recent data from the Energy Information Administration (EIA), crude oil inventories rose by 1.33 million barrels week-over-week, while gasoline stocks also saw a counter-seasonal increase, indicating lower-than-expected gasoline demand.

Oil prices have notably dropped from the previous year, leading to reduced enthusiasm for drilling among producers. The latest Baker-Hughes survey indicated a drop in the U.S. oil rig count to a 42-month low, primarily affecting the Permian Basin, which reported a significant decline in rig numbers.

Wall Street observers, including Goldman Sachs, posit that the slowdown in Permian Basin drilling could help bolster crude prices. Goldman notes that the overall U.S. rig and frac spread counts have decreased, signaling a likely drop in tight oil production. This trend is particularly concerning given the Permian Basin's historically low breakeven costs due to efficient production techniques. Other U.S. shale regions, facing higher production costs, may experience even greater pressure to scale back operations amidst persisting low oil prices.