OPEC+ delayed its ministerial meeting until July 2 to hold more talks on oil output policy, OPEC+ sources said on July 1, after the United Arab Emirates (UAE) blocked a plan for an immediate easing of cuts and their extension to the end of 2022.
OPEC+ sources earlier said the plan, on which top OPEC+ producers Saudi Arabia and Russia had reached a preliminary agreement, would see output rise by 400,000 bbl/d a month from August to December 2021 to meet rising global demand.
Responding to oil demand destruction caused by the COVID crisis, OPEC+ had last year agreed to cut output by almost 10 million bbl/d from May 2020, with plans to phase out the curbs by the end of April 2022. Cuts now stand at about 5.8 million bbl/d.
Moscow and Riyadh had also proposed extending the duration of cuts until the end of 2022 to avoid a new glut next year.
But the UAE, which has ambitious oil output growth targets, objected to the proposal during the meeting, sources said, adding that it asked OPEC+ to change the baseline for cuts—a level of initial output from which reductions are calculated.
A higher baseline means a lower actual cut.
Brent crude was trading on July 1 above $75/bbl, close to 2-1/2 year highs.
An OPEC+ technical panel on June 29 had said it expected oil demand to grow by 6 million bbl/d in 2021 but flagged risks of a glut in 2022, saying there were “significant uncertainties” including an uneven global recovery and rising cases of the Delta variant of the coronavirus.
Saudi Arabia, Russia and other OPEC+ members have been cooperating closely since their big falling out in March 2020 just before the pandemic sent oil prices diving. The price crash drove them back together to forge their supply pact.
Recommended Reading
Lake Charles LNG Selects Technip Energies, KBR for Export Terminal
2024-09-20 - Lake Charles LNG has selected KTJV, the joint venture between Technip Energies and KBR, for the engineering, procurement, fabrication and construction of an LNG export terminal project on the Gulf Coast.
Entergy Picks Cresent Midstream to Develop $1B CCS for Gas-fired Power Plant
2024-09-20 - Crescent will work with SAMSUNG E&A and Honeywell on the project.
FERC Chair: DC Court ‘Erred’ by Vacating LNG Permits
2024-09-20 - Throwing out the permit for Williams’ operational REA project in the mid-Atlantic region was a mistake that could cost people “desperately” reliant on it, Chairman Willie Phillips said.
Diamondback to Sell $2.2B in Shares Held by Endeavor Stockholders
2024-09-20 - Diamondback Energy, which closed its $26 billion merger with Endeavor Energy Resources on Sept. 13, said the gross proceeds from the share’s sale will be approximately $2.2 billion.
Optimizing Direct Air Capture Similar to Recovering Spilled Wine
2024-09-20 - Direct air capture technologies are technically and financially challenging, but efforts are underway to change that.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.