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Despite friction, OPEC+

reaches output compromise

The group managed to reach a compromise, though the historically compliant
Emirates’ have become a thorn in OPEC’s side with major ambitions of their own

COMMENTARY OPEC and its partners agreed a deal last week that The UAE refused to give its support for Saudi
will see members of the broader OPEC+ group proposals to extend the 7.7mn bpd cuts for a fur-
increase total production by a combined 500,000 ther three months unless quota-busting mem-
WHAT: barrels per day (bpd) from January 1 with further bers, including Iraq, Nigeria and Russia, be held
OPEC+ has agreed to rises to be discussed on a monthly basis. to account and forced to make the promised, but
ease production cuts Current cuts stand at 7.7mn bpd and were as yet largely undelivered, compensatory cuts.
by 500,000 bpd from due to drop to 5.7mn bpd next month. The new In October, OPEC members Angola, Congo
January 1. agreement, though, will see monthly hikes of a (Brazzaville), Equatorial Guinea, Gabon, Iraq,
maximum of 500,000 bpd, effectively pushing Nigeria and the UAE committed to a combined
WHY: back the total increase by three months, accord- 1.054mn bpd in compensatory cuts for Septem-
Members had been ing to Russian Deputy Prime Minister Alexander ber-December, with a further 586,000 bpd com-
pushing to reduce the Novak. Meanwhile, Iranian Oil Minister Bijan pensation required but unaccounted for in their
cuts, while kingpin Saudi Zanganeh said that the group would stick to the plans. Meanwhile, OPEC+ partners committed
Arabia had proposed an new deal until the total production increase had to a further 168,000 bpd in cuts for the same
extension of the 7.7mn reached 2mn bpd. period, with another 566,000 bpd in over-pro-
bpd reductions for three Speaking to reporters on the sidelines of the duction unaccounted for.
further months. Vienna summit, Saudi Energy Minister Prince The Emirates, which broke formation in the
Abdulaziz bin Salman Al-Saud said: “The mar- summer to increase output above permitted lev-
WHAT NEXT: ket should take comfort [from] the idea that we els, were swiftly chastised by Saudi and quickly
The group will meet have all of the tools in our kit and will release improved their compliance. Meanwhile, Iraq,
monthly to assess moves them drip by drip as we see how the market which promised to make compensatory cuts of
to further ease the output behaves. It’s a sensible way of being very careful nearly 700,000 barrels for the final four months
restrictions. and diligent.” of the year, increased production in October and
to that point had failed to improve compliance
Rift despite a commitment from the country’s Min-
The announcement followed well-publicised fric- istry of Oil (MoO).
tion between OPEC’s two key allies, Saudi Arabia Prince Abdulaziz said that the compen-
and the UAE, with the latter keen to push for higher satory scheme had not been as successful as
output as it seeks greater decision-making powers the group had hoped, but added that mem-
on its own upstream strategy. bers had given “many assurances” about their

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