Although geopolitical developments in the Middle East captured investor attention at the end of last month, other factors also shaped sentiment – chief among them, the OPEC+ producer alliance’s output policy. There was a rather spectacular U-turn in its market management approach three months ago. Since 2022, OPEC+ has withheld nearly 6 million barrels per day (mbpd) of production in an effort to tighten the global oil balance and support prices. Part of this involved a voluntary 2.2 mbpd cut by eight members of the group, including Saudi Arabia and Russia.

This 2.2 mbpd was originally scheduled to be gradually returned to the market in 16 monthly installments of 137,000 barrels per day (bpd) throughout this year and next. However, Saudi Arabia, dissatisfied with the compliance of certain members, decided to increase the pace of the monthly restoration to 411,000 bpd between May and July, and is recommending maintaining this accelerated pace until September. By that time, the entire 2.2 mbpd cut would be fully unwound.

Increased supply inevitably loosens the oil balance and consequently has a significant impact on oil prices. For this reason, forming a realistic view of what to expect from the upcoming producer meeting on July 6 is imperative. The CME OPEC Watch Tool offers helpful guidance. It calculates the probabilities of different outcomes based on the flagship August 2025 WTI contract and the nearest active Crude Oil Weekly option prices.

Once the at-the-money implied volatility for the July 6 expiration and the standard deviation are derived, the formula generates three possible outcome probabilities: a larger increase, an expected increase and a small increase.

These outcomes represent percentage probabilities rather than absolute volumes. Nonetheless, they can be translated into market sentiment terms as follows:

• Larger increase = Bearish scenario
• Expected increase = Neutral outcome
• Small increase = Bullish prospect

The snapshot displayed in the chart above suggests a neutral market view. However, since the formula continuously tracks changes in option prices and implied volatility, the OPEC Watch Tool requires ongoing monitoring to form a reliable view of the most plausible outcome and its potential impact on oil prices.