OPEC+ agrees to boost crude output in Aug
Group to host next meeting on September 1
OPEC , the group of oil-exporting countries behind recent historic production cuts, will bring 00,000 barrels per day back to the markets in August and will revise baselines used to calculate quotas from May 2022.
Under the latest agreement, producers including Iraq, uwait, Saudi Arabia, Russia and the UAE will see their baselines rise.
OPEC , which is headed by Saudi Arabia and Russia, extended its agreement until the end of December 2022. The group reached a consensus over the phasing out of .8 million bpd of withheld supply following weeks of deadlock and will review the pact at the end of the year.
“We’re dealing with uncertainty. And if you are dealing with uncertainty, the first thing you need to do is to acquiesce to the concept that you cannot predict uncertainty,” Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister told reporters after the meeting.
“So yes, we will keep the 00,000 bpd on a monthly basis. We will review in December. We kept our window open for review. If things go as well hopefully by September 2022, we will return to the market the .8 million bpd but the spirit that you see today will enable us to even go beyond 2022,” he said.
Oil prices ended last week down nearly percent in one of the steepest weekly declines since March.
Following the OPEC decision to boost supply, Brent, the international benchmark, is still headed towards 80 per barrel as demand is set to outpace supply, said Giovanni Staunovo, commodity analyst at Swiss bank UBS.
“With some further production increases over the coming months from Opec , we also see the market becoming less tight as we move towards the end of the year and so expect a modest price setback towards 7 per barrel,” he added.
“OPEC still want to keep their hands on the steering wheel with the group’s monthly meetings so as to remain flexible and adjust amid unforeseen events,” said Staunovo.
The group’s latest show of consensus will provide a signal to non-OPEC players regarding future investment plans and keep oil prices in backwardation a trend where future prices are lower than they are currently, he said.