The OPEC+ group decided on Thursday to continue easing their collective crude oil production cuts by just 400,000 barrels per day next month, ignoring calls from the United States and other major oil-consuming nations to open the taps and tame the price rally.
In a short and rather uneventful meeting, OPEC+ reaffirmed today its previous plans to increase supply by just 400,000 bpd, despite pressure from consuming nations who had called for a larger increase so as to halt the rally in energy and gasoline prices that could slow economic growth.
The alliance will boost total production by 400,000 bpd in December, OPEC said after the meeting, without addressing the issue of several African OPEC members such as Nigeria and Angola that have been struggling to raise their production up to their respective quotas, thus underperforming in increasing supply to the market.
The meeting reiterated the OPEC+ commitment “to ensure a stable and a balanced oil market, the efficient and secure supply to consumers and to provide clarity to the market at times when other parts of the energy complex outside the boundaries of oil markets are experiencing extreme volatility and instability, and to continue to adopt a proactive and transparent approach which has provided stability to oil markets,” OPEC said.
The rationale for keeping a cautious approach to easing the cuts seems to be assessments from OPEC+ experts that Q4 would see a smaller market deficit than expected earlier and that the balance would tip into surplus next year.
As per the production table provided by OPEC, the group of OPEC+ producers will have a collective quota of required production of 40.094 million bpd in December, of which the 10 OPEC members bound by the pact should pump no more than 24.3 million bpd, and the non-OPEC producers led by Russia will have a ceiling of 15.794 million bpd.
Saudi Arabia and Russia, the OPEC and non-OPEC groups leaders within OPEC+, respectively, will each have a production ceiling of just over 10 million bpd—at 10.018 million bpd each.
Oil prices jumped by more than 2% after news first broke that OPEC+ would not change course, but retreated to trade lower later.
By Tsvetana Paraskova for Oilprice.com
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