OPEC+ opts for September output increase of just 100,000 bpd
Quantum Commodity Intelligence - OPEC+ announced Wednesday a production increase of just 100,000 barrels per day in September, a figure below most expectations, although not entirely unexpected.
Following intense lobbying from the US and other major consumers, some market watchers expected OPEC+ to revert to 400,000 bpd monthly hikes after the previous agreement from April 2020 expired.
The producer alliance has been reluctant to boost output ahead of demand, while there have also been concerns over burning through spare capacity too quickly.
"The Meeting noted that the severely limited availability of excess capacity necessitates utilizing it with great caution in response to severe supply disruptions," said the official communique, while also noting that "chronic underinvestment" in the oil sector has reduced excess capacities along the value chain.
Delegates were also said to be concerned at the sharp contraction in market structure in key crude oil benchmarks, including Brent and Dubai.
The producer alliance had been restoring the record 2020 cuts at a monthly rate of 400,000-432,000 bpd since August 2021 before ramping up to a 648,000 bpd increase during July and August of this year.
However, compliance levels among members of the OPEC+ producer alliance soared to a record 320% in June, up from 256% in May, according to Argus Media, quoting OPEC delegates.
Output came in at 2.84 million bpd below its collective June production target, with compliance among core OPEC participants narrowing to 196% from 236% in May and among non-Opec members increasing to 464% from 360%.
The core OPEC group pumped 28.98 million bpd of crude last month, a Reuters survey found, up by over 300,000 bpd from June's revised total but still 1.3 million bpd under target.
The biggest increase in production, of 150,000 bpd, came from top exporter Saudi Arabia, while the Kingdom's September quota calls for a further increase of just 30,000 bpd.
The next OPEC+ meeting will take place on 5 September.
Highlights of key OPEC+ meetings
March 2020
OPEC+ group fails to reach an agreement on cutting supplies in the face of the COVID-19 pandemic, as both Russia and Saudi increase production, triggering a sharp price drop.
April 2020
OPEC+ agrees to a record supply cut of 9.7 million bpd, oil prices rebound.
June 2020
Producers agree to extend the first phase of the 9.7 million bpd cuts for another month but announce plans for reduced cuts to 7.7 million bpd starting in August.
December 2020
Members announce a small 500,000 bpd increase for January 2021. Agree to hold meetings on a more regular basis in 2021 to review market conditions.
January 2021
Agrees to keep output steady except for small increases in Russia and Kazakhstan. Saudi Arabia announces a voluntary 1 million bpd cut for February and March.
April 2021
OPEC+ agrees to gradually increase production by 1 million bpd May-July, while Saudi to restore 1 million bpd of voluntary cuts.
June 2021
OPEC+ meeting lasts under one hour, ends with an agreement to stick with the existing plan, but no discussion on output changes for August and beyond.
July 2021
OPEC+ agrees to increase output by 400,000 bpd each month from August to December, adding 2 million bpd in total, but with the flexibility to review the proposed hikes.
December 2021
Agrees to a further 400,000 bpd hike in January after pressure from consumer countries, despite Omicron Covid surge and Q1 oversupply fears.
Late-March 2022
May quotas set to rise by a combined 432,000 bpd, linked to higher baseline levels. Shrugs off pressure to ramp up production after Russia's invasion of Ukraine.
June 2022
OPEC+ agrees to increase output by 648,000 bpd in both July and August.
August 2022
Modest increase of 100,000 bpd announced for September.
