OPEC+ is likely to keep its oil output policy unchanged when the group meets on Wednesday and continue with its planned modest production increase, three OPEC+ sources told Reuters.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, collectively known as OPEC+, will meet on Sept. 1 to discuss the previously agreed increase of 400,000 barrels per day (BPD) for the next several months.
U.S. President Joe Biden’s administration has urged OPEC and its allies to boost oil output to tackle rising gasoline prices that it views as a threat to the global economic recovery.
On Monday, Brent was down 16 cents or 0.2% at $72.54 a barrel by 0654 GMT. It rose more than 11% last week in anticipation of disruptions to oil production from Hurricane Ida.
But the OPEC+ sources said the recent rise in oil prices was temporary, driven mainly by disruption of supply in Mexico and the severe storm hitting the U.S. Gulf Coast over the weekend.
“Current oil prices around $70 are okay. OPEC+ is likely to continue as planned with the increase of 400,000 BPD,” said one source.
Another OPEC+ said it was “very likely” that the 400,000 BPD increase would go ahead from September.
Kuwait oil minister Mohammad Al-Fares on Sunday told Reuters that this week OPEC+ would discuss whether it would continue with its planned increase or reconsider it and halt the rise adding that economies of East Asian countries and China were still affected by COVID-19 and caution should be exercised.
He later told state news agency KUNA that Kuwait supports any decision taken by OPEC+ ministers based on consensus.
OPEC+, the Oil problem, and the 19th ONOMM
Earlier this July, two key actors in OPEC+, UAE and Saudi Arabia brawled over the oil production cut policy. Analysts were worried to see two oil-rich countries take a snap at each other and speculated that without a done deal the alliance would be in tatters.
The 19th OPEC and non-OPEC Ministerial Meeting (ONOMM), of 18 July 2021, concluded to “adjust upward their overall production by 0.4 mb/d monthly starting August 2021 until phasing out the 5.8 mb/d production adjustment, and in December 2021 assess market developments and Participating Countries’ performance.”
The 20th OPEC and non-OPEC Ministerial Meeting is to be held on 1 September 2021.
— Amena Bakr (@Amena__Bakr) August 29, 2021
Via Reuters with inputs from GVS