OPEC+ to Maintain Output Policy

It is expected that the upcoming meeting for the Organization of the Petroleum Exporting Countries (OPEC) and its allies will decide on Wednesday to maintain the current output policy, which entails easing production cuts gradually, amid a global recovery from the pandemic.

The OPEC+ previously decided to increase production by 400,000 barrels per day until the end of the year.

The United States has reportedly asked OPEC to further raise production, in order to combat the high gasoline prices, but the OPEC+ alliance remains on track for slower production increases.

OPEC’s monthly report for August showed that the growth in the global demand for oil is estimated at six million barrels per day this year, maintaining the same expectations of July.

This year, oil demand is expected to recover to 96.6 million barrels a day, with OPEC seeing a recovery by 3.3 million barrels per day in 2022, with global demand exceeding 100 million barrels per day (bpd) in the second half of 2022. Average demand of 99.9 million bpd is seen for the year.

Despite maintaining the same expectations, OPEC sees that the global economic conditions have already improved due to increased vaccinations and recovery from the coronavirus pandemic.

OPEC also expects an increase in supplies, with non-OPEC output seen growing by 270,000 bpd this year and by 840,000 bpd in 2022.

The OPEC+ commitment to the current level of output cuts stood at 115%, despite OPEC members increasing production in July by about 640,000 bpd to 26.7 million.

OPEC is gradually easing output cuts, and while Libya, Iran, and Venezuela are exempt from output restrictions, Iraq, Nigeria, Kuwait, and the UAE increased production last month, while Saudi Arabia is easing its voluntary cuts.