The OPEC+ group is sticking to its plan to ease the production cuts in January by 400,000 barrels per day, despite mounting evidence of a larger-than-expected oil surplus early next year.
At the meeting of the alliance on Thursday, the ministers have decided to keep the policy to add 400,000 bpd to the market each month, as they have been doing since August.
All ministers of the OPEC+ group appear to be in agreement with increasing output by another 400,000 bpd next month—that is, rolling over the current supply addition policy, Amena Bakr, Deputy Bureau Chief & Chief Opec Correspondent at Energy Intelligence, reported, citing sources.
There will also be an extension of the compensation cuts, the sources added.
Before the full OPEC+ ministerial meeting, the Joint Ministerial Monitoring Committee (JMMC) held a meeting, which ended with the panel not issuing any recommendation for OPEC+ production in January.
Shortly before the JMMC meeting began, reports had it that the OPEC+ group could discuss adding just 200,000 bpd in January instead of 400,000 bpd, or even a pause in the ramp-up of production, sources told Reuters.
Going into the meeting, OPEC+ was said to be expecting a worse-than-previously expected surplus in the first quarter of 2022.
Some analysts expected the alliance to indeed pause the cuts, considering the expected oversupply, a potential impact of the Omicron variant, and the SPR releases from several nations led by the United States.
Earlier this week, Saudi Arabia and Russia had already signaled that the new variant—still very little researched—shouldn’t be a reason to jump to hasty decisions.
Russia currently doesn’t see the need for urgent measures, Russian Deputy Prime Minister Alexander Novak said on Monday.
“We don’t see such a need, we will carefully monitor the situation, but there is no need to rush to hasty decisions,” Novak, Russia’s chief oil policy negotiator at OPEC+, said.
So OPEC+ stayed the course and is raising its total production quota by 400,000 bpd in January. The new quotas per country, as reported by Energy Intelligence’s Bakr, include Saudi Arabia and Russia producing up to 10.122 million bpd each in January, with a total OPEC+ quota of 40.494 million bpd as follows:
By Tsvetana Paraskova for Oilprice.com
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