OPEC + sticks to November production plans despite $ 80 worth of oil, sources say By Reuters
© Reuters. FILE PHOTO: The OPEC logo pictured before an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. REUTERS / Ramzi Boudina
By Ahmad Ghaddar, Olesya Astakhova and Alex Lawler
LONDON / MOSCOW (Reuters) – OPEC + is expected to stick to an existing deal to add 400,000 barrels per day (bpd) to its November production when it meets next week, sources said, despite the caused oil to peak three years above $ 80 per year. barrel and consumer pressure for more supply.
The Organization of the Petroleum Exporting Countries and its Russian-led allies, known as OPEC +, agreed in July to increase production by 400,000 b / d each month to phase out 5.8 million b / d j reductions. He also agreed to evaluate the deal in December.
“So far, we will stick to the 400,000 bpd hike plan,” one of the sources said.
OPEC +, which has held regular meetings, agreed in September to continue its existing plans for a production increase in October.
The OPEC + Joint Technical Committee (JTC), which met on Wednesday, sees the oil market posting a surplus of 1.4 million bpd next year under its baseline scenario, slightly below the previous forecast of 1.6 million bpd, showed a presentation seen by Reuters.
In his opening remarks to the JTC, OPEC Secretary General Mohammad Barkindo said the current OPEC + deal helps keep the oil market in balance.
“Where we are today, ministerial decisions by OPEC and non-OPEC countries to start bringing 400,000 bpd back to market each month continue to help balance the need for ‘incremental increases to meet demand, while guarding against the potential for supply overshoot,’ he said. , according to the OPEC (NYSE 🙂 Twitter account.
The JTC sees the oil market in deficit by 1.1 million bpd this year, assuming demand growth of around 6 million bpd. It assumes demand growth of 4.2 million bpd next year.
The sources said OPEC + ministers, who are meeting online on Monday, will review the JTC’s findings before making a final decision.
hit a three-year high above $ 80 a barrel on Tuesday, spurred by unplanned outages in the United States and a strong recovery in demand after the pandemic hammers. Prices were trading just below $ 80 on Wednesday.
The White House, which voiced concerns about high prices in August, said on Tuesday it was in communication with OPEC and figuring out how to deal with the cost of oil.
India, the world’s third-largest importer and consumer of oil, signaled on Tuesday that a surge in crude prices would accelerate the transition to alternative energy sources.
Energy ministers from OPEC members Iraq, Nigeria and the United Arab Emirates have said in recent weeks that the group sees no need to take extraordinary steps to change the existing deal.
JTC’s agenda includes meeting existing cuts, which stood at 116% in August, meaning the group is cutting back more than expected as several members face national constraints on increasing production . This suggests a tighter oil market.
OPEC members Nigeria and Angola, Africa’s top oil exporters, will struggle to increase production to their OPEC + quota levels until at least next year due to underinvestment issues and maintenance, sources said.
This means that any significant increase in the group’s production would have to rely on producers with spare capacity, such as Saudi Arabia and the United Arab Emirates.
Barclays (LON 🙂 said the recovery in demand would exceed OPEC + measures to reduce its restrictions “in part due to the limited ability of some producers in the group to increase production, which should drive the cushion of stocks at the lowest level in decades “.