LONDON, July 2 — The members of the Opec+ alliance of oil producing countries will reconvene today a day after failing to reach agreement on production quotas from August onwards.
Yesterday was a busy day of video-conferencing for the alliance’s ministers, starting with a meeting between the 13 members of Opec proper led by Saudi Arabia, followed by a technical meeting (JMMC) and full discussion between the 23 members of Opec+.
The wider grouping includes Russia, the world’s second-largest oil producer.
A statement from Opec said the 13 member states are expected to restart negotiations at 1300 GMT, with an Opec+ meeting following at 1430 GMT.
The hitch in Thursday’s discussions came “due to the UAE raising a last minute objection to the Russian-Saudi Arabia deal reached earlier in the day”, according to analysts from Deutsche Bank.
The UAE “wants to raise the so-called baseline for its production cuts because its production capacities are now higher,” said Eugen Weinberg from Commerzbank.
The Bloomberg agency reported on Thursday that an agreement had been floated which would involve raising production by 400,000 barrels per day (bpd) each month from August onwards, reaching an extra two million bpd by the end of 2021.
This would fit the broad strategy followed by Opec+ since May: gradually increasing output which it had drastically cut in reaction to the collapse in demand at the beginning of the pandemic.
The alliance has to navigate a complex market, characterised by an uptick in demand which may yet turn out to be fragile, as well as the possible complication of a return of more Iranian exports in the medium term.
In addition, current high prices are prompting grumbles from large crude consumers such as India.
Also expected to be on the agenda today will be whether the Opec+ can extend its current production deal “through to the end of 2022”, noted Neil Wilson from Markets.com. — AFP
