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FSUOGM                                        COMMENTARY                                            FSUOGM


































       OPEC+ strike deal on 500,000 bpd





       supply hike new year







       OPEC+ has reached a compromise deal to restore 500,000 bpd of oil supply,

       but cracks in the alliance are widening



        GLOBAL           OPEC and its partners have hammered out a  Friction among allies
                         deal to bring some 500,000 barrels per day (bpd)  The announcement of a deal follows well-pub-
       WHAT:             of oil supply back on stream next year, after  licised friction between OPEC’s two key mem-
       OPEC+ will bring   meeting for talks on December 3.    bers, Saudi Arabia and the UAE. The latter have
       500,000 bpd of oil supply   The agreement is a compromise between  grown frustrated with the failure of Iraq and
       back online in January,   those members that had wanted to stick closer  other members to meet their quotas.
       and potentially make   to the original plan of restoring 1.9mn bpd   The UAE also wants greater decision-making
       similar increases on a   of production on January 1, and those that  power over its own upstream strategy, having
       monthly basis after that.  had preferred to maintain current cuts for  recently unveiled a $122bn five-year investment
                         longer, in light of weaker oil demand as a  plan to expand production. Last month there
       WHY:              result of renewed coronavirus (COVID-19)  were even rumblings that the UAE was consid-
       The deal is a compromise   lockdowns.                  ering exiting the alliance, although Energy Min-
       between those members that   The new agreement is flexible, allowing  ister Suhail Al-Mazrouei later downplayed these
       wanted to bring back much   OPEC+ to bring back up to a further 500,000  reports, reaffirming the Gulf state’s commitment
       more production and those   bpd on a monthly basis after January. This means  to the oil cartel.
       who wanted to maintain   the original 1.9mn bpd increase planned for Jan-  The UAE initially refused to sign up for the
       current cuts for longer.  uary could be achieved in April.  deal unless quota-busting members including
                           “The market should take comfort [from]  Iraq, Nigeria and Russia were held to account
       WHAT NEXT:        the idea that we have all of the tools in our  and forced to make the promised, but as yet
       OPEC+ will be able to   kit and will release them drip by drip as we  largely undelivered, compensatory cuts.
       respond to changing   see how the market behaves,” Saudi Energy   In October, OPEC members Angola, Congo
       market conditions more   Minister Prince  Abdulaziz bin  Salman  (Brazzaville), Equatorial Guinea, Gabon, Iraq,
       quickly, but potential   Al-Saud told reporters on the sidelines of  Nigeria and the UAE committed to a combined
       monthly adjustments   the Vienna summit. “The market should.  1.054mn bpd in compensatory cuts for Septem-
       create a lot of   It’s a sensible way of being very careful and  ber-December, with a further 586,000 bpd com-
       uncertainty.      diligent.”                           pensation required but unaccounted for in their



       P4                                       www. NEWSBASE .com                      Week 49   09•December•2020
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