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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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OPEC Secretly Discusses 500,000 Bpd Production Boost

Saudi Arabia and other OPEC members have been discussing on the quiet a half-a-million-barrel increase in their combined oil production to keep a lid on oil prices, unnamed sources told Reuters amid growing concern that the Iran sanctions will create a serious shortage in global supply.

The increase could be shared by non-OPEC producers as well, the sources said.

The information contradicts the official Saudi stance expressed at the OPEC+ meeting in Algiers last weekend but, said the sources, Riyadh did not want to make the discussions public in order to avoid upsetting those OPEC members that did not have enough spare production capacity to deploy quickly enough to weather the effects of the Iran sanctions.

“There are only two months left until the end of the year, so why create tensions now between Saudi Arabia, Iran and Russia?” one of the sources said.

Of course, tensions between Saudi Arabia and Iran are anything but non-existent, but Riyadh also wants to keep its co-members of OPEC united for future purposes, such as deciding to start cutting production again.

A cut may become necessary in view of growing U.S. production, which has had Saudi Energy Minister Khalid al-Falih worried: U.S. barrels could contribute to surplus supply if global demand slows down next year. Related: Brent Oil Breaks Its Post-Crash High

Indeed, OPEC’s latest estimates about demand and supply feature a 2.4-million-bpd increase in non-OPEC supply in 2019, versus demand growth of just 1.5 million bpd. The non-OPEC supply increase will be led by the United States. The cause for concern is a legitimate one: emerging economies that are leading the rise in demand are reporting weaker economic growth, not least on the back of higher oil prices.

According to Reuters sources, Saudi Arabia could raise production by 200,000-300,000 bpd this month and next, which means its total would reach 10.6-10.7 million by the end of October, from the August 10.4 million bpd.

By Irina Slav for Oilprice.com

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Leave a comment
  • Jack Ma on September 27 2018 said:
    The secret is out now, or your articles are not read by enough people to justify concern. I would like to think that you have a large enough readership to justify the former. In any event, Saudi is pumping mostly water from their wells, and dropping bombs in Yemen and Syria in hopes of thieving their wells. No IPO because they can never let the world really know they are out of oil. IMHO
  • Mitch on September 27 2018 said:
    Seeing as the saudi/UAE netural zone is still offline with the intentions of coming back late this year or early 2019. It doesnt seem like it would be hard to increase 500k b/d, as that is supposedly what the production rate was for the netural zone before being taken offline. This, along with spare capacity beung brought online, and stockpile draw downs is why we wont see 100 dollar oil this year. And Q1 always sees a decrease in demand which isnt far away to becoming front month contracts

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