“OPEC Plus” returns to the negotiating table to discuss future production policy

[size=52]“OPEC Plus” returns to the negotiating table to discuss future production policy[/size]

[size=45]Increasing expectations of rising global demand for oil[/size]
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Expectations to reach an agreement between the countries of the “OPEC Plus” group during today’s meeting (Reuters)

[size=45]The “OPEC +” countries return to the negotiating table again, through a virtual meeting, today (Sunday), to take a decision on the future production policy, after news of significant progress towards the agreement of member states with the UAE.
Earlier this month, the UAE had objected to a Saudi-Russian proposal that most members agreed to, regarding a deal that linked an increase in oil production next August to extending the alliance agreement until the end of next year, which led oil prices to the highest level in 6 years. .
The UAE wants an upper limit for production, in return for supporting the extension of the current agreement of the alliance from April 2022 until December 2022. At the previous “OPEC +” meeting, it called for resetting the baseline for production cuts to about 3.8 million barrels per day next year, Which may increase its production limit by more than 600-700 thousand barrels per day.
The Organization of the Petroleum Exporting Countries, along with Russia and other allies in the group known as OPEC+, still need to make a final decision on production policy after talks stalled this month.
And “Bloomberg” agency reported that the ministerial conference of the coalition countries will be held online at 12 noon, Vienna time, although one of the delegates indicated that all ministers had not confirmed attendance.
And Reuters news agency quoted three sources in “OPEC +” as saying that the ministers of the group that includes “OPEC” and its allies intend to hold its next meeting on Sunday, to take a decision on production policy.
And “Bloomberg” indicated that ministers from Saudi Arabia, Kuwait, the UAE and the Sultanate of Oman met online yesterday (Saturday) to discuss the matter.
It seems logical thus, amid great secrecy on those meetings, as officials confirmed, earlier, that the invitation to the meeting of the coalition will take place only when the agreement is within reach.
And OPEC + agreed, last year, to record production cuts of about ten million barrels per day, to counter the decline in demand caused by the outbreak of the Corona virus epidemic, restrictions that have been gradually eased since then and now amount to about 5.8 million barrels per day.
A source in "OPEC +" said last week, according to "Reuters", that the group agreed with Abu Dhabi's request that the baseline for the Emirates, which is the level at which cuts are calculated under the "OPEC +" agreement on supply restrictions, be at 3.65 million barrels. per day as of April 2022, up from 3.168 million barrels per day currently.
Oil analysts have warned that the UAE's request may open up similar claims from OPEC+ countries as other members will seek better terms to address the production cap. According to one delegate, there was ample assurance that Iraq, too, would seek to achieve a higher baseline production, but he did not specify the number it might demand or when it would come into effect. Like the United Arab Emirates, Baghdad has boosted its production capacity since the start of the “OPEC +” agreement, with the help of international companies.[/size]
[size=45]– The need to increase OPEC Plus production
despite the decline in global oil prices, during the past week, economist Julian Lee believes that almost everyone agrees on the world’s need to increase crude oil supplies in the markets to meet the increasing demand in light of the economic recovery from the repercussions of the Corona virus pandemic. Corona.
While almost everyone agrees on the need to allow OPEC + countries to increase their production to achieve market balance in the coming months, there is less consensus among countries regarding the additional amount that can be pumped into the markets, according to Lee.
The International Energy Agency, the US Energy Information Administration and the Organization of Petroleum Exporting Countries (OPEC) agree that global demand for oil will continue to grow until at least the end of next year. The three institutions also believe that global oil consumption will exceed by the end of next year its levels in 2019 before the outbreak of the Corona pandemic, and then continue to rise. But there is disagreement about the path consumption will take to reach this point, says Julian Lee, an economist who specializes in oil markets.
Lee said, in a report published by Bloomberg Agency yesterday, that the US administration believes that global demand for oil will return to pre-pandemic levels during the second quarter of next year. On the other hand, "OPEC" expects to reach this level during the third quarter of next year, but the International Energy Agency takes a more cautious view and believes that the demand for this level will not happen before the last quarter of next year.
At the same time, the three institutions believe that the growth rate of oil demand will decline to pre-pandemic levels, with the effect of the significant decline in demand over the past year due to the Corona pandemic fading, which is currently reflected in the annual comparison figures. None of the institutions expects oil demand to reach a peak on a global basis, but the International Energy Agency believes that consumption in the developed countries members of the Organization for Economic Cooperation and Development will be lower during the last quarter of next year than its levels a year ago, as Europe will be the first region to record this backing down.
But Julian Lee, who previously worked as a senior analyst at the Center for Global Energy Studies, believes that the return of oil demand growth rates to normal levels does not mean the return of oil markets to a state of equilibrium.[/size]
[size=45]- «OPEC» expects global demand
forecast «OPEC», last Thursday, rising global demand for oil in 2022, up to a level comparable to rates of pre - pandemic, and led by growth in the United States, China and India.
The Organization of the Petroleum Exporting Countries said, in its monthly report, Thursday, that demand will rise by 3.4 percent next year to 99.86 million barrels per day, with an average of more than 100 million barrels per day in the second half of 2022.
“There are expectations,” the Organization of the Petroleum Exporting Countries said in the report. Strong growth in the global economy in 2022 … includes better containment of (Covid-19), especially in emerging and developing countries, and is expected to stimulate demand for oil to reach pre-pandemic levels in 2022.”
The report reflects OPEC's confidence that global demand will recover strongly from the pandemic, allowing the organization and its allies to further ease the unprecedented production restrictions that were applied in 2020. Some analysts had said that global oil demand may have peaked in 2019. And
OPEC kept, In its report, it also expected demand growth of 5.95 million barrels per day, equivalent to 6.6 percent, in 2021. And
"OPEC" expects that demand for oil in China and India will exceed pre-pandemic levels next year. She said the US would have the largest contribution to demand growth in 2022, but US oil use would remain slightly below 2019 levels.[/size]
[size=45]London: «Middle East»[/size]
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