Oil price rise dampens hopes for OPEC output cap

Directional impact on forecast:
Bearish on oil prices

The prospects of OPEC reintroducing an oil output ceiling at its 2 June meeting are fading fast as oil prices recover. Saudi Arabia – OPEC’s kingpin – is staunchly opposed to cutting or freezing output unless other OPEC and non-OPEC members do the same. However, oil prices hovering around $50 per barrel have the potential to increase production from shale plays in the United States, making the likelihood of any action by OPEC even more remote.