OPEC and its allies have reached a consensus protocol After compromising on the calculation of output targets for some of its largest members, it increased oil production as prices soared.
The members of the OPEC+ group, including the UAE, Saudi Arabia, Russia, Iraq, and Kuwait, will all have a higher production benchmark—that is, the level of calculation of output transactions—in Abu Dhabi’s victory, threatened to destroy earlier this month transaction.
result Long-lost The meeting should mean that the oil production of members will increase in the next few months, because oil prices have soared to their highest level in three years, which may drag down the economic recovery during the pandemic rebound.
Initially, OPEC+ will pump an additional 400,000 barrels of oil per day from August, and total production will increase by about 2 million barrels per day by the end of the year. These monthly production increases will continue next year, and OPEC+ said it has extended the agreement from April 2022 to December 2022.
Prince Abdulaziz bin Salman, the Minister of Energy of Saudi Arabia, said he believes that the agreement shows that the group can overcome differences and that the oil market will now become clearer.
“We are back with full strength and determination,” Prince Abdulaziz added, joking at the beginning of the meeting, just like Arnold Schwarzenegger’s Terminator The slogan “I will come back”, OPEC + is “stay”.
According to the agreement, the UAE’s complained production benchmark fails to reflect its growing capacity, which will increase from the current approximately 3.2mb/d to 3.5mb/d.
The baselines of Saudi Arabia and Russia will both rise to 11.5 mb/d (from today’s 11 million barrels/day), while the baselines of Iraq and Kuwait will increase by 150,000 barrels/day to 4.8 mb/d and 3 million barrels/day, respectively.
UAE Energy Minister Suhail Al Mazrouei stated that despite the differences this month, the country is still “committed to the group and will always work within the group” when trying to balance the oil market.
The oil producer group cut production by nearly 10 million barrels per day in April 2020 at the height of the lockdown and travel ban due to weakening demand. However, as the economy reopened, production gradually recovered.
The output of about 5.8mb/d is still not on the market, but it is expected that this level will basically recover by the end of 2022.
With demand picking up, Brent crude, the international oil benchmark, has soared to a three-year high of more than US$75 per barrel, and traders warned that the market is rapidly tightening.
As demand is expected to continue to rise, it remains questionable whether OPEC+ resumed trading volumes will be sufficient to significantly curb prices in the coming months.
The UAE’s complaints about the baseline hampered this month’s deal and revealed Fault line Between Abu Dhabi and Riyadh, Saudi Arabia has traditionally been the most powerful member of the OPEC core group.
This week’s talks with Saudi Arabia have been laid basic work In order to compromise.
The decision to increase the production benchmarks of other large members seems to be to avoid a larger-scale split, although it is unlikely to lead to higher production until the original deal expires in April 2022 next year. The existing benchmark will remain unchanged until then, OPEC+ said, but the monthly output growth of 400,000 barrels per day will continue until the end of 2022.
Prince Abdulaziz stated that according to the plan, Saudi Arabia’s own production may exceed 11 million barrels per day in the second half of next year.
“This shows that OPEC+ is keen to continue to manage the market and reduce inventory,” said Amrita Sen of Energy Aspects. “The baseline changes make things a little more complicated, but the group actually guarantees a monthly output of 400,000 barrels per day after May 2022, which will control supply.”
The next OPEC+ meeting will be held on September 1.