Page 11 - NorthAmOil Week 49

NorthAmOil COMMENTARY NorthAmOil

Despite friction, OPEC+ reaches

output compromise

The group managed to reach a compromise, though the historically compliant UAE

has become a thorn in OPEC’s side with major ambitions of its own

GLOBAL OPEC and its partners agreed a deal last week push for higher output as it seeks greater deci-
that will see members of the broader OPEC+ sion-making powers on its own upstream
WHAT: group increase total production by a combined strategy.
OPEC+ has agreed to 500,000 barrels per day (bpd) from January 1 The UAE refused to give its support for Saudi
ease production cuts with further rises to be discussed on a monthly proposals to extend the 7.7mn bpd cuts for a fur-
by 500,000 bpd from basis. ther three months unless quota-busting mem-
January 1. Current cuts stand at 7.7mn bpd and were bers, including Iraq, Nigeria and Russia, be held
due to drop to 5.7mn bpd next month. The new to account and forced to make the promised, but
WHY: agreement, though, will see monthly hikes of as yet largely undelivered, compensatory cuts.
Members had been a maximum of 500,000 bpd, effectively push- In October, OPEC members Angola, Congo
pushing to reduce the ing back the total increase by three months, (Brazzaville), Equatorial Guinea, Gabon, Iraq,
cuts, while kingpin Saudi according to Russian Deputy Prime Minister Nigeria and the UAE committed to a combined
Arabia had proposed an Alexander Novak. Meanwhile, Iranian Oil Min- 1.054mn bpd in compensatory cuts for Septem-
extension of the 7.7mn ister Bijan Zanganeh said that the group would ber-December, with a further 586,000 bpd com-
bpd reductions for three stick to the new deal until the total production pensation required but unaccounted for in their
further months. increase had reached 2mn bpd. plans. Meanwhile, OPEC+ partners committed
Speaking to reporters on the sidelines of the to a further 168,000 bpd in cuts for the same
WHAT NEXT: Vienna summit, Saudi Energy Minister Prince period, with another 566,000 bpd in over-pro-
The group will meet Abdulaziz bin Salman Al-Saud said: “The mar- duction unaccounted for.
monthly to assess moves ket should take comfort [from] the idea that we The UAE, which broke formation in the sum-
to further ease the output have all of the tools in our kit and will release mer to increase output above permitted lev-
restrictions. them drip by drip as we see how the market els, was swiftly chastised by Saudi and quickly
behaves. It’s a sensible way of being very careful improved its compliance. Meanwhile, Iraq,
and diligent.” which promised to make compensatory cuts of
nearly 700,000 barrels for the final four months
Rift of the year, increased production in October
The announcement followed well-publicised and to that point had failed to improve compli-
friction between OPEC’s two key allies, Saudi ance despite a commitment from the country’s
Arabia and the UAE, with the latter keen to Ministry of Oil (MoO).

Week 49 10•December•2020 www. NEWSBASE .com P11