Ministers of the OPEC+ agreement will hold another meeting Wednesday via videoconference to set oil production levels for September. This OPEC+ meeting will be the first for the new OPEC Secretary-General, Haitham al-Ghais, who took office on August 1. The day before, he attended a meeting of the alliance's technical panel, a source of one of the delegations told TASS.
Since August 2021, OPEC+ countries have been gradually increasing oil production by 400 thousand barrels per day (bpd) and reconfirmed this plan each month separately due to the high uncertainty in the market. At the ministerial meeting on March 31, the plan was slightly updated - from May to June 2022, the OPEC+ countries were increasing production by 432,000 bpd because of new production baselines for some countries. The countries of the alliance were supposed to fully withdraw from the production limitations agreed as part of the deal by the end of September 2022.
However, at the June meeting, the member countries of the agreement decided to accelerate production growth to 648,000 bpd for July and August, redistributing the September quota evenly due to the forecast summer increase in oil demand due to the recovery of the world economy after the coronavirus pandemic. Thus, the alliance countries should fully restore production to pre-pandemic levels by the end of August.
However, as of June, according to the Technical Committee of OPEC +, which was read by TASS, the production lag of OPEC + countries from the planned targets was 2.84 million bpd, and the deal itself is executed by 320%. Earlier TASS sources in OPEC+ delegations said that many OPEC members have now reached the maximum level of oil production and there is no possibility to increase production at a faster pace, but Saudi Arabia and the UAE still have spare production capacity.
All roads lead to Saudi Arabia
The meeting comes two weeks after US President Joe Biden's Middle East tour, which included a visit to Saudi Arabia. The USA was trying to persuade Saudi Arabia and other Arab countries to significantly increase the amount of oil they produce in order to bring down the price of oil on the world market. The US leader said the US was expecting some steps in this direction in the coming weeks but he did not specify what actions he was counting on in this sphere.
Meanwhile, in July 29 in Saudi Arabia, the meeting of Deputy Prime Minister Alexander Novak and the Minister of Energy of Saudi Arabia, Prince Abdulaziz bin Salman Al Saud, was held, during which the parties expressed their intention to continue cooperation within OPEC+ and to do everything possible to maintain stability in the oil market.
According to Reuters sources, OPEC+ countries, despite Biden's visit and his attempts to persuade Middle Eastern countries to increase production, will discuss either a small increase in oil production for September or maintaining the current production target (43.854 million bpd).
Production parameters for September will be traditionally discussed in two stages. Firstly, the meeting of OPEC+ monitoring committee will take place in the form of a video conference, where representatives of eight countries participating in the agreement will meet. The committee's work is being administered by Russia and Saudi Arabia, the largest participants of the agreement in terms of production volumes. The meeting will start at 14:00 Moscow time.
During the meeting of the monitoring committee its participants will discuss the assessment of the oil market condition by the OPEC+ technical panel, meeting of which was held the day before. According to the report of the technical committee (TASS got acquainted with the text of the document), the oil market in 2022 will remain in oversupply. The surplus is estimated at an average of 0.8 million bpd in 2022, and in 2023, it could fall to 0.5 million bpd.
Following the monitoring committee meeting, the decision on production levels for September will be approved by all 23 OPEC+ countries at a ministerial meeting scheduled to start at 14:30 Moscow time.
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Based on materials from TASS