OPEC says no to Joe
The Organization of the Petroleum Exporting Countries (OPEC) is not sticking with the planned oil production increase in November under the OPEC+ deal. This comes despite the calls from US President Joe Biden to boost oil output.
According to a Reuters survey published on Tuesday, the group’s crude oil production rose by 220,000 barrels per day, 13% short of the boost that OPEC should be providing.
Under the OPEC+ deal reached earlier this year, 10 OPEC member-states are to boost their combined production by 254,000 barrels per day each month, while the bloc’s non-member allies, including Russia, are to contribute 146,000 barrels per day more. The total OPEC+ supply increase should reach a total of 400,000 barrels per day through next year, until oil production hits pre-Covid-19 pandemic figures.
However, according to the survey, some OPEC members don’t have the capacity to produce more. While OPEC’s major producers Saudi Arabia and Iraq complied with their production boost quota in November, Angola, Gabon, and Equatorial Guinea failed to pump more oil. Angola’s output slumped by 50,000 barrels per day, with exports dropping to record lows, according to tanker schedules.
OPEC+ is set to meet on Thursday to assess the market and decide on production levels for January, with analysts warning that the group could pause supply increases amid woes over the new Omicron Covid-variant effect on global oil demand. Also, experts say the recently announced strategic oil reserves release by the US and five other major oil consuming countries could force the group to cut production increases, as it could bring about a crude surplus early next year.
Oil prices rose more than 3% ahead of the OPEC+ meeting, recouping some of the heavy losses earlier this week. Global benchmark Brent crude futures rose $3, or 4.4%, to above $72 a barrel at 09:00am GMT on Wednesday, while US West Texas Intermediate (WTI) rose $2.86, or 4.3%, to $69 a barrel.
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