Page 8 - NorthAmOil Week 36 2022

NorthAmOil POLICY NorthAmOil

OPEC+ reverses recent addition

with first cut in 18 months

GLOBAL THE OPEC+ group of oil producers this week The reduction swiftly dispelled any return of
met to decide their next production quotas, questions about the OPEC+ group’s relevance
electing to row back on last month’s increase in and while the market’s thirst for oil has tested
the wake of falling prices and demand concerns. the top end of production, a willingness to cut
As expected, the 100,000 barrel per day (bpd) output is likely to ensure the producers keep
uptick added in August was removed again on crude prices within levels they deem acceptable
September 6, with the group saying it would – reportedly a minimum of $90 per barrel.
meet again on October 5. In a press release pub- Speaking to Forbes Middle East, Dr. Yousef
lished by OPEC, the group noted “the adverse Alshammari, CEO & Head of Oil Research at
impact of volatility and the decline in liquid- CMarkits, said: “It is expected that the cut will
ity on the current oil market and the need to lead to around 43,000 bpd of actual production
support the market’s stability and its efficient being cut from Saudi Arabia, UAE and Kuwait,
functioning”. while other producers are already falling behind None would
It reiterated its “readiness to make imme- their quotas. The gap between OPEC+ quota and
diate adjustments to production in different actual production is already close to 3mn bpd.” be more
forms, if needed”. The caution comes amid con- However, he added that the “decision reflects
cerns about global recession and the apparently that OPEC+ is still in control and is ready to take disappointed
increasing likelihood of Iranian crude returned further measures to balance the markets espe-
to the market. cially under fears of recession and weakening than US President
The quota cut is the group’s first for 18 months demand in the months ahead.” Joe Biden.
and follows months of over-compliance with It comes as yet another blow to consumer
quotas – underproduction – as members strug- nations that see lower oil prices – and higher
gle to add to output as they max out capacity and supplies – as a means of driving economic
Russian levels are depressed by domestic eco- growth. None would be more disappointed than
nomic issues and other sanctions-related issues. US President Joe Biden, who the White House
As a result, the impact on markets has been said was “determined to continue to take every
muted, but the message behind the move may be step necessary to shore up energy supplies and
indicative of what is to come. lower energy prices.” In recent weeks, there have
While Saudi Arabia has been able to increase been reports suggesting that this could include
output – to around 10.9mn bpd in July and an easing of restrictions on the purchase of Ven-
August from 10.7mn bpd in June – there are con- ezuelan and Iranian crude, while talks between
cerns about its ability and desire to raise produc- international governments and Tehran on
tion towards majority state-owned NOC Saudi the renewal of the Joint Comprehensive Plan
Aramco’s self-proclaimed 12mn bpd maximum of Action (JCPOA) appear to be progressing
sustainable capacity (MSC). towards a conclusion.™

P8 www. NEWSBASE .com Week 36 08•September•2022