Opec+ output decision delay tests co-ordination capacity

Opec+ output decision delay tests co-ordination capacity

Opec+ has delayed its decision on the extent of crude oil production increases, raising questions about the alliance's capacity to coordinate production and highlighting disagreements about supply policies, according to Fitch Ratings.

 

Earlier this week, Opec+ postponed for a third time its meeting to finalise the decision on the next phase of production increases and each country's production quota. 

 

Saudi Arabia, Russia and the UAE are reportedly struggling to reach a compromise, it stated. 

 

Oil prices have increased to the highest levels in three years due to a widening oil deficit, which we currently assess at slightly more than 1 million barrels per day (mmb/d). Oil supply is constrained by the previous alliance output decision, while crude oil demand is growing as the global economy recovers from pandemic-related shocks, said Fitch Ratings in its report.

 

While Saudi Arabia, Russia and the UAE have offered to boost the alliance's production by 0.4 mmb/d each month from August to December, the UAE also demands to increase its baseline production (a starting point from which its cuts and increases are calculated) from April 2022 to account for its larger production capacity following investment. 

 

The country has capacity of about 4 mmb/d and this may increase to 5 mmb/d