Argus Media Limited

10/04/2021 | News release | Distributed by Public on 10/04/2021 10:11

Opec+ sticks to 400,000 b/d November output hike:Update

Adds Aramco CEO comments on demand in paragraphs 3 & 4

The Opec+ alliance has agreed to stick to its plan to increase its collective crude production quota by 400,000 b/d next month, despite growing signs that the market may need a larger hike.

Trading and Opec sources have flagged robust oil demand in the short term, and there has been a rapid drawdown in inventories, as well as a sustained rise in crude prices. Ice Brent crude futures hit $82/bl earlier today, the highest since 11 October 2018. Also today, Saudi state-controlled Aramco's chief executive Amin Nasser said the recent rise in gas prices has added to demand.

"There are some shifts that we have seen from gas to liquids, the impact oil demand to an additional 500,000 b/d," Nasser told the Energy Intelligence Forum 2021.

Rising prices have triggered renewed calls - most notably from Washington - for Opec+ to consider restoring production more quickly than planned. The current agreement targets a 400,000 b/d rise each month from August until April next year, and a 432,000 b/d monthly increase thereafter until last year's cuts are fully unwound. The increases must be rubber-stamped at monthly ministerial meetings and can be paused for up to three months if market conditions warrant it.

The group's Joint Ministerial Monitoring Committee (JMMC), which met earlier today, discussed raising the ceiling by 800,000 b/d in November and then pausing the increase for December - effectively condensing the planned hike across the two months into one. But in the end, the group decided to stick to the status quo on the view that the current strength in demand is temporary. Opec+ members said that the outlook for crude demand in the first quarter of next year is uncertain.

Today's decision is in line with the group's tendency to be overly cautious. Furthermore, several Opec+ ministers and delegates have warned in recent months that some member countries may struggle to deliver their share of the monthly output hikes as a result of short-term infrastructure issues or longer-term field decline, as in the case of Nigeria and Angola, or because of overestimated baselines, as in Russia's case.

Argus estimates that the 19 countries participating in the output restraint deal raised their collective production by only 100,000 b/d in August - just a quarter of the agreed quota rise - after several countries failed to reach their new targets. Opec+ will next meet on 4 November to discuss the production policy for December.

By Rowena Edwards, Ruxandra Iordache, and Nader Itayim

Opec+ quotas mn b/d
Country Baseline November October
Saudi Arabia 11.000 9.913 9.809
Iraq 4.653 4.193 4.149
Kuwait 2.809 2.532 2.505
UAE 3.168 2.855 2.825
Algeria 1.057 0.952 0.942
Nigeria 1.829 1.649 1.631
Angola 1.528 1.377 1.363
Congo (Brazzaville) 0.325 0.293 0.290
Gabon 0.187 0.168 0.166
Equatorial Guinea 0.127 0.115 0.114
Opec total 26.683 24.047 23.794
Russia 11.000 9.913 9.809
Oman 0.883 0.796 0.787
Azerbaijan 0.718 0.647 0.640
Kazakhstan 1.709 1.540 1.524
Malaysia 0.595 0.537 0.531
Bahrain 0.205 0.185 0.183
Brunei 0.102 0.092 0.091
Sudan 0.075 0.068 0.067
South Sudan 0.130 0.117 0.116
Non-Opec total 17.170 13.895 13.747
Opec+ total 43.853 37.942 37.541