Q2 2023: OPEC+ surprise cut

I. Market Summary

Supply discipline—and Mother Nature—were the twin market engines this quarter. A surprise OPEC+ production cut in early April and Canadian wildfires in May tightened balances, while the IEA lifted its demand forecast to a fresh record.

II. OPEC+ springs another cut

On 2 April Saudi Arabia and several allies announced an additional 1.16 mb/d voluntary cut effective May, bringing total pledged reductions to 3.66 mb/d. On 4 June Riyadh doubled‑down, pledging a unilateral 1 mb/d cut for July “extendable as needed.”

III. Wildfires disrupt North American output

More than 100 wildfires in Alberta forced operators to shut in at least 319 kb/d (>3 % of Canadian supply) in mid‑May, threatening feed‑stock for U.S. Midwest refiners and supporting regional differentials.

IV. Demand outlook upgraded

The IEA’s June Oil Market Report forecast 2.4 mb/d y/y global demand growth to 102.3 mb/d, citing “unrelenting” Chinese petrochemical pull.

V. Price & structure

Brent rallied from ~US $72 to US $87 immediately after the April cut, before macro concerns unwound half the gain; the prompt curve flipped back into backwardation. Middle‑East OSPs to Asia were raised by Saudi Aramco for July liftings, signalling confidence in underlying demand.

V. Take‑aways for operators

Unscheduled supply losses—the Canadian fires—can coincide with policy‑driven cuts, amplifying price swings; dynamic hedging strategies beat static programmes.

The demand recovery is now firmly non‑OECD led; marketing and trading desks should re‑weight analytics toward Asia and emerging markets.