OPEC+ did not give the world more oil than promised

18:07 06.11.2021 3061


 OPEC+ ministers on Thursday unanimously decided to follow the plan and not increase oil production more than planned.  Consumer pleas for additional volumes remained unanswered.  OPEC+ explains this by forecasts of a future drop in demand, Interfax reports.

 The price of oil has risen by about 1.6 times since the beginning of the year – from $ 50 to $ 80 per barrel, which raises consumer concerns about the recovery of economic growth after the pandemic.  The largest oil consumers – China, India, the United States – turned their pleas to the OPEC+ countries, which regulate oil production in order to balance the market, with a request to increase production.

 OPEC+ has been gradually increasing its oil production by 400 thousand barrels per day every month since July in order to neutralize the restrictions of 9.7 million b/d taken at the height of the COVID-19 pandemic, and meets monthly to «fit» the track  following the market situation.

 According to Interfax, a possible increase in oil production was actively discussed by the OPEC+ participants, but the risks of a drop in oil demand, in particular seasonal, as well as the risk of the spread of the «delta» strain became factors «against» such actions.

 But in order not to seem cruel to the market, OPEC+ organized a press conference, where, in addition to the usual regulars – representatives of Russia and Saudi Arabia – the oil ministers of the UAE, Nigeria, Kuwait, Mexico, Azerbaijan also spoke.  Each spoke about the cohesion and the factors that did not allow to satisfy the current needs of consumers.

 Nigeria's oil minister Timipre Silva said that there is no shortage of supply on the market, and OPEC+ does not need to change its plans.  Keeping the plan «is the best solution,» he said, and the market must continue to be monitored.

 According to Kuwaiti Minister Mohammed Al-Fares, according to all forecasts, in 2022 the oil market will be in surplus.

In turn, the Minister of Energy of the UAE Mohammed Al-Mazrui noted that an oversupply in the oil market could arise as early as the first quarter of 2022.  «Therefore, the decision to maintain the rate of recovery in production in December is justified,» he said.

 Saudi Arabian Energy Minister Prince Abdulaziz bin Salman confirmed that negotiations with consumers were underway.  But most of all, of course, were interested in negotiations with the United States, whose President Joe Biden accused OPEC+ of rising fuel prices.  However, earlier Abdulaziz bin Salman retorted that the rise in fuel prices in the United States is associated with the rise in prices for ethanol, which is added to gasoline, and an increase in oil imports will not help here.

 “As for the United States, yes, we had negotiations at all levels, and we still believe that we are doing the right job,” the minister confirmed at a press conference after the OPEC+ meeting.

 According to him, the decision to keep the decision to increase oil production by only 400 thousand bpd was made «in the interests of all», and also because, according to forecasts, in December, the growth of commercial oil reserves will begin, which will continue throughout the first quarter.  In particular, because OPEC+ will increase oil production, while oil demand usually slows down in winter.  «Just think, OPEC+ will add more than 1 million bpd in December, January and February – this will already be enough to cover the demand,» said the Minister of the Kingdom.

 In general, Abdulaziz bin Salman called for consumers to express their wishes about the need to increase oil production for 3-4 years in advance, since producers need clear signals to increase investments in increasing production.

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