As Phase 3 of COVID rages globally, the UAE, Kuwait, and Iraq are uncertain about extending OPEC oil production cuts into 2021, which means that come November, the OPEC deal could come into question despite the clear demand lag amid a pandemic that shows no sign of letting up. This throws a wrench into efforts to rebalance the market, and even though Saudi Arabia, and even at-times-hesitant Russia, appear ready to continue 7.76 million bpd of cuts into the New Year, Iraq has always been an outlier, and now even UAE and Kuwait are having second thoughts thanks to debilitating budget deficits.
In April, the UAE was pumping 3.9 million bpd. Now it’s pumping less than 2.6 million bpd. Kuwait is producing just under 2.3 billion bpd, down from around 3.1 million bpd prior to the OPEC cuts. Iraq definitely can’t handle the cuts, and is counting on a pass entirely for 2021. Yet on Friday, Iraq threw official support behind any OPEC+ unanimous decision on the production cuts.
By November, a time of massive uncertainty over U.S. presidential elections and the economic scourge of a resurgent pandemic, OPEC may add to oil’s woes.
As it stands, OPEC+ is hoping to “relax” production cuts to 5.8 million bpd in January, but the Saudis and Russians have also made it clear that they will consider demand implications before making that decision. And for now, with the ‘third wave’ of COVID ravishing the U.S. and Europe, and…