OPEC plus agrees to raise output by 400,000 bpd each month

MOSCOW, Jul 19 (PRIME) -- The OPEC plus alliance has agreed to prolong its oil output reduction deal until the end of 2022 and to increase combined oil production by 400,000 barrels per day each month starting from August, the OPEC plus said in a statement on July 18.

“In view of current oil market fundamentals and the consensus on its outlook, the Meeting resolved to: … Extend the decision of the 10th OPEC and non-OPEC Ministerial Meeting (April 2020) until the December 31, 2022. Adjust upward their overall production by 0.4 million b/d on a monthly basis starting August 2021 until phasing out the 5.8 million b/d production adjustment, and in December 2021 assess market developments and Participating Countries’ performance,” the statement read.

Given dynamics of the output increase, the oil output contraction liabilities will cease to exist at the end of September 2022.

The alliance will assess the general condition and prospects of the oil market in December 2021, but will continue monthly meetings of the ministers of OPEC and non-OPEC states.

The alliance also coordinated an increase of the baseline production level on which the output reduction quotas are calculated after May 2022. The increase for Russia and Saudi Arabia will amount to 500,000 bpd, for the United Arab Emirates (UAE) to about 330,000 bdd, and for Iraq and Kuwait to 150,000 bpd.

The next meeting of ministers of the OPEC plus members was scheduled for September 1.

Saudi Arabian Energy Minister Abdulaziz bin Salman said in a news conference that the alliance would continue to exist even after the current oil deal expires, while Energy Minister of the UAE Suhail al-Mazrouei said that the country remained committed to the alliance.

“On behalf of the UAE, I would like to underline the constructive dialogue we had with the OPEC+ countries under the smart leadership of His Royal Highness (Prince Abdulaziz bin Salman Al Saud) and His Excellency (Russian Deputy Prime Minister) Alexander Novak,” al-Mazrouei said.

Novak explained the decision by the oil market recovery with demand for oil and oil products was rising while activity in the car and air transportation sectors increased thanks to mass vaccinations.

“These are the positive moments that have an impact on market recovery. We see deficit on the market today, this is why we decided that it was necessary to raise production by 400,000 barrels per day on a monthly basis,” he said in an interview to Rosssiya 24 television channel

As a result of the new agreements, Russia will reach the pre-crisis oil production level in May 2022. The new agreement allows the country to raise production by 100,000 bpd starting from August, meaning that additional production will amount to about 21 million tonnes this year and in 2022. Given the average oil price of U.S. $60 per barrel, additional budget revenue will exceed 400 billion rubles, Novak said.

(74.1656 rubles – U.S. $1)

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