“OPEC +” increases its oil production by an additional 400,000 barrels

The “OPEC +” alliance decided, on Wednesday, to increase its oil production from the current production cut quota by 400,000 barrels, after a previous increase by the same amount in August.

This evening, the twentieth ministerial meeting of OPEC and independent producers, which was held via video conference, concluded.

The meeting noted that while the effects of the COVID-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened and OECD stocks continue to fall as the recovery accelerates.

The meeting welcomed the positive performance of the countries participating in the Declaration of Cooperation; Overall compliance with production adjustments reached 110% last July including Mexico (109% without Mexico), which reinforces the trend of higher compliance by the participating countries.

In light of the current fundamentals of the oil market and consensus on its expectations, the meeting decided to reconfirm the production adjustment plan and the monthly production adjustment mechanism adopted by the Alliance, and the decision to adjust the monthly total production by 0.4 million barrels per day for the month of October 2021.

The Alliance also decided to extend the compensation period until the end of December 2021 as required by some poor performing countries, and to require that the poorly performing countries submit their compensation plans by September 17, 2021.

The 21st OPEC and non-OPEC ministerial meeting will be held on October 4, 2021.

After the announcement, oil prices stabilized on Wednesday, after OPEC and its allies agreed to adhere to their current policy of gradual increases in crude production.

The global benchmark Brent crude contracts ended the trading session four cents lower, to settle at $71.59 a barrel, while the US West Texas Intermediate crude futures rose nine cents to close at $68.59 a barrel.

At their lowest levels in the session, Brent fell to $70.42 a barrel, while US crude fell to $67.12 a barrel.

After the decision issued today, the total production cut agreement will amount to about 5 million barrels per day, compared to 5.4 million barrels per day last August.

At the alliance meeting last July, they agreed to increase oil supplies to the global market by 400,000 barrels per month, leading to the culmination of the production cut agreement that began last May.

The coronation will be in September 2022, according to what was said last month by Saudi Energy Minister Prince Abdulaziz bin Salman, who expressed his hope that production cuts would reach zero barrels in that month.

It is noteworthy that the current production cut agreement expires in December 2022, after it was extended last month, instead of April 2022.

The coalition led by Saudi Arabia and Russia is gradually working to restore the massive amount of crude oil production they withheld during the pandemic, and will often agree to move to the next monthly production level when they meet.