OPEC +: agreement reached, quotas will increase
When the first agreement for OPEC + shares (i.e. OPEC plus Russia) was to blow it up, it was the United Arab Emirates, many thought there was no mending. After two weeks of discussions, however, an agreement has been reached that has brought everyone together, including the Emirates and which also provides for a gradual increase in the basic production quotas.
The 19th OPEC and non-OPEC Ministerial Meeting has commenced via videoconference under the Chairmanship of HRH Prince Abdul Aziz Bin Salman, Saudi Arabia's Minister of Energy and Co-Chair HE Alexander Novak, Russian Deputy Prime Minister, together with… pic.twitter.com / RyjMQIpMj8
– OPEC (@OPECSecretariat) July 18, 2021
Sunday's oil deal calls for OPEC + to increase production by 400,000 barrels per day each month from August through the latter part of 2022. The deal aims to eliminate all 5.8 mmb / day of cuts in production carried out at the beginning of the pandemic, when economies were closing and demand was in turmoil and when the WTI was briefly traded at a deeply negative price, although Prince Abdulaziz warned that the new monthly mechanism allows OPEC + to pause or even reverse production increases in the event of a slump in demand.
The table below shows individual oil production targets for OPEC + countries for the remainder of this year, following the group's agreement to increase total supplies by 400k b / d every month since August. The figures are in thousands of barrels per day.
The deal also provides the UAE and several other countries with higher baselines against which their production cuts are measured, starting in May 2022, according to a statement from the group.
Aside from the revised base quotas, today's deal is generally in line with the one made earlier this month, but whose final deal was stalled for over two weeks after the UAE called for a reassessment of its own. quota of production within the group. Last week, OPEC leader Saudi Arabia reached a compromise with the UAE.
OPEC said the UAE's baseline will rise by approximately 332,000 barrels per day to 3.5 million barrels per day. Saudi Arabia and Russia, two of the world's largest producers along with the United States, will each see their baseline raised by 500,000 barrels per day. Overall, the group's estimated production capacity by May 2022 will increase by 1.63 million barrels per day.
The individual revised baselines are shown in the table below, in thousands of barrels per day:
As Bloomberg notes, the multi-faceted deal means several things for the oil market. It gives buyer countries a clearer view of how quickly OPEC + will restore the 5.8 million barrels per day of production it is still holding since making deep cuts last year in the early stages of the pandemic. Furthermore, the base adjustments will not change the pace of monthly production increases of 400,000 barrels per day when they take effect next year, Prince Abdulaziz said. The group will continue to meet each month, including a market review in December, and could change the schedule if needed, he said.
"The monthly meetings and the December review tell you everything is editable," said Bill Farren-Price, director of research firm Enverus. "So oil bulls should read it as positive – OPEC + ongoing supply management." The only question is how long before US shale producers increase their production to take advantage of higher oil prices.
Today's deal also resolves longstanding grievances that have caused tensions within OPEC + since late 2020, culminating earlier this month when the UAE blocked a deal earlier this month. arguing that the way its share was calculated was unfair because it did not reflect an expensive expansion in the country's industry. The quarrel has been particularly bitter and tensions extend beyond oil diplomacy amid growing economic rivalry between Abu Dhabi and Riyadh. Ministers from each country used media interviews to bolster their case, awakening memories of the 2020 Saudi-Russia price war as well as the UAE's past threats to leave the cartel. However, the problem now seems to be over.
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The OPEC + article : agreement reached, quotas will increase comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/opec-accordo-raggiunto-aumenteranno-le-quote/ on Mon, 19 Jul 2021 06:00:39 +0000.