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OPEC+ is working to keep prices around $70 per barrel, Reuters has reported, citing Iraq’s oil minister, Ihsan Abdul Jabbar Ismail.
The official said the ministry hoped that oil prices would remain above $65 per barrel.
OPEC—and its allies led by Russia—agreed earlier this year to add 400,000 bpd to total production beginning August until they restored their production levels to those from before the pandemic, which would occur by the end of the first half of 2022.
However, demand has grown faster than initially expected, and there have been calls—including from the United States—for OPEC to boost production more quickly. For now, the cartel has resisted.
A recent Reuters report noted that not all OPEC+ members can simply turn the taps back on. In Nigeria, Angola, and Kazakhstan, the report said, years of underinvestment had coupled with delayed maintenance due to the pandemic to make production restoration a challenging task.
OPEC+ compliance with its production control deal rose to 116 percent in August. The cartel also revised its demand outlook for next year in its monthly publication, and substantially. OPEC said it now expected oil demand to reach 100.8 million bpd, an upward revision of close to 1 million bpd from its August Monthly Oil Market Report.
This year, total global oil demand remains unchanged at 96.7 million bpd for the whole of 2021. But the fourth-quarter demand was revised slightly down, by 110,000 bpd from the August estimate of 99.82 million bpd to 99.7 million bpd now, OPEC said in its September report. This was before the gas crunch in Europe really took off, however.
Now, OPEC producers are warning that the crunch could drive oil demand higher. Iraq’s oil minister said he expected stronger demand for its crude as utilities looked for alternatives to gas. The head of Nigeria’s state oil firm, for his part, predicted that oil prices could rise $10 per barrel over the next six months.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com