OPEC+ Set To Stick To Plan To Ease Oil Production Cuts

The OPEC+ alliance is widely expected to keep their current plans of easing the collective oil production cuts as the group gathers for its monthly meeting today.

OPEC+ decided in the middle of July that it would start returning 400,000 bpd to the market every month beginning in August until it unwinds all the 5.8 million bpd cuts. The group agreed to extend the existing deal from April 2020 through the end of December 2022.

Today’s meeting comes with Brent Crude prices close to $80 a barrel and an expected rise in demand because of gas-to-oil switching in the winter. On the other hand, the Delta variant still poses downside risks to global oil demand in the coming months.

As the ministers of the OPEC+ group were preparing to begin their monthly meeting via video conference at 1 p.m. GMT, media reports started trickling about the sentiment among delegates.

Most reports point to OPEC+ keeping the earlier plans, with cuts eased by no more than 400,000 bpd per month for November and December.

One option is to ease the cuts by 400,000 bpd in November, while another would be to increase production by 800,000 bpd in November but not to raise output in December, according to Amena Bakr, Deputy Bureau Chief and Chief Opec Correspondent at Energy Intelligence.

Earlier today, three sources at OPEC+ told Reuters that the group were likely to keep the 400,000-bpd monthly increase for November, in view of still uncertain developments of COVID around the world.

“There are calls for more of a production increase by OPEC+,” one of Reuters’ sources said.

“We are scared of the fourth wave of corona, no one wants to make any big moves,” the source added.

Russian President Vladimir Putin hasn’t had any contacts with OPEC countries ahead of today’s meeting, as all the work is being done by Deputy Prime Minister Alexander Novak, Kremlin spokesman Dmitry Peskov said on Monday.

“Traditionally we would not like to prejudge any outcome of such a meeting,” Peskov said, as carried by Russian news agency TASS.

By Tsvetana Paraskova for Oilprice.com