OPEC and its allies have reached a consensus protocol After compromising on the calculation of production targets for some of its largest members, it increased oil production as prices soared.
The members of the OPEC+ group, including the UAE, Saudi Arabia, Russia, Iraq, and Kuwait, will all have a higher production benchmark—that is, the level of calculation of output transactions—in Abu Dhabi’s victory, threatened to destroy earlier this month transaction.
result Long-lost The meeting should mean that the oil production of members will increase in the coming months, as oil prices have soared to their highest level in three years, which may drag down the economic recovery during the rebound after the Covid-19 pandemic.
Initially, OPEC+ will add an additional 400,000 barrels of oil per day from August, and total production will increase by about 2 million barrels per day by the end of the year. These monthly production increases will continue next year, and OPEC+ said it has extended the agreement from April 2022 to December 2022.
“The meeting noted that market fundamentals continued to strengthen and oil demand showed obvious signs of improvement,” OPEC+ said in a statement.
According to people familiar with the matter, according to the agreement, the UAE’s complained production benchmark fails to reflect its growing capacity, which will increase from the current approximately 3.2mb/d to 3.5mb/d.
Both Saudi Arabia and Russia will see their Baseline Rising to 11.5 mb/d (from today’s 11 million barrels/day), while Iraq and Kuwait’s baselines have increased by 150,000 barrels/day to 4.8 mb/d and Kuwait’s 3 million barrels/day, respectively.
The oil producer group cut production by nearly 10 million barrels per day in April 2020 at the height of the lockdown and travel ban due to weakening demand. However, as the economy reopened, production has been slowly recovering.
The output of about 5.8mb/d is still not on the market, but it is expected that this level will basically recover by the end of 2022.
With demand picking up, Brent crude, the international oil benchmark, has soared to a three-year high of more than $75 per barrel, and traders warned that the market is tightening rapidly.
As demand is expected to continue to rise, it remains questionable whether OPEC+ resumed trading volumes will be sufficient to significantly curb prices in the coming months.
The UAE’s complaints about the baseline hampered the deal earlier this month and revealed Fault line Between Abu Dhabi and Riyadh, Saudi Arabia has traditionally been the most powerful member of the OPEC core group.
This week’s talks with Saudi Arabia have been laid basic work In order to compromise.
The decision to increase the production benchmarks of other large members appears to be to avoid a wider split, although it is unlikely to lead to higher production targets before the original deal expires in April 2022 next year. Existing benchmarks will remain unchanged until then, OPEC+ said.
The next OPEC+ meeting will be held on September 1.