OPEC+ to Proceed with December Oil Output Increase, Impact Expected to be Minimal - Exclusive Insights
By Maha El Dahan, Olesya Astakhova and Alex Lawler
In a groundbreaking development, OPEC+ is poised to move forward with a planned increase in oil output for December. However, the impact of this decision is expected to be minimal, thanks to a strategic plan by certain members to implement larger cuts to offset overproduction in the coming months.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, are scheduled to raise output by 180,000 barrels per day in December, as part of a carefully orchestrated plan to gradually reverse recent output cuts.
Notably, Iraq and Kazakhstan have committed to implementing additional cuts totaling 123,000 bpd in September, with further reductions planned for the future to address previous overproduction. This proactive approach is set to mitigate the potential impact of the December output increase.
According to sources within OPEC+, the incremental increase in December is not aimed at reclaiming market share, but rather at allowing a select group of countries to phase out their voluntary output cuts.
Despite speculation and reports, Saudi Arabia remains steadfast in its commitment to OPEC+ agreements, with plans to proceed as scheduled on December 1. The country has also dispelled rumors of an unofficial $100 per barrel oil price target, emphasizing that decisions are made based on market fundamentals and the need to balance supply and demand.
Looking ahead, top ministers from OPEC+ are set to convene on October 2 for a comprehensive review of the market. While no policy changes are expected at this meeting, Russian Deputy Prime Minister Alexander Novak confirmed that there are no alterations to the plans for phasing out oil production cuts starting in December.
Furthermore, there is speculation that the ministers may reconvene in November for further discussions, highlighting the ongoing commitment of OPEC+ to maintaining stability in the oil market.
In conclusion, the decision by OPEC+ to proceed with the December oil output increase, coupled with the proactive measures taken by certain members to offset overproduction, is expected to have a minimal impact on the market. This strategic approach underscores the commitment of OPEC+ to ensuring a balanced and stable oil market, which could have significant implications for global economies and individual investors. Stay tuned for further updates on this evolving situation.