Mubasher: A technical panel at the Organization of Petroleum Exporting Countries (OPEC) expected global oil demand to remain resilient in the second half of 2018, which indicates that market could absorb extra supply from the OPEC producers.

OPEC’s technical panel on Monday met to review market outlook to be presented for OPEC’s oil ministers later in this week’s meeting in Vienna, three sources from the organisation told Reuters.   

If the 13-country OPEC and its allies sustained the production levels of May, the market would be cast into a shortage for the next six months, one of the sources said.

Saudi Arabia and Russia have suggested gradually relaxing voluntary supply cuts, proposing that OPEC and non-OPEC countries boost supply by 1.5 million barrels per day (bpd), Ecuador’s oil minister Carlos Perez said on Monday.

The suggestion came amid calls from the US and China, major oil consumers, to cool down crude prices and support global economy by ramping up production.

On the other hand, despite the strong market outlook in the second half of the year, OPEC members Iran, Iraq, Venezuela, and Algeria expressed their opposition to an output increase, the sources added.

Iraq and Iran, OPEC’s second and third largest producers, said that the increases would breach previous agreements to maintain curbs until the end of the year. Moreover, Kuwait and Oman were also against big and immediate output hikes.

Saudi Arabia proposed a 1.5 million bpd increase as “a tactic” to convince fellow OPEC members to compromise on a smaller hike from 500,000 to 700,000 bpd, according to one of the sources.

By 1:47 pm GMT, US Nymex futures dropped 1.26% to $65.02 per barrel (pb), while global benchmark Brent crude shed 0.29% to 75.19 pb.