Page 13 - FSUOGM Week 36 2022

FSUOGM POLICY FSUOGM

OPEC+ reverses recent addition

with first cut in 18 months

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

Week 36 09•September•2022 www. NEWSBASE .com P13