OPEC+ and its allies are likely to keep their plan to gradually restore the vast amount of crude production halted during the pandemic and continue increasing production by 400,000 barrels per day every month for the remainder of the year even as members such as Kuwait are raising concerns about the weakness of the market.
Plans for supply increases came into question, as international crude prices sank about $11 a barrel roughly 15 percent, in the first three weeks of August as China reimposed lockdowns.
The 400,000 bpd increase in oil output agreed by OPEC+ nations in previous gatherings might be reconsidered at its next meeting on Sept. 1, Reuters reported on Sunday, citing Kuwait’s oil minister.
“The markets are slowing. Since COVID
-19 has begun its fourth wave in some areas, we must be careful and reconsider this increase. There may be a halt to the 400,000 (bpd) increase,” Mohammad Abdulatif Al-Fares told Reuters at a government-sponsored event in Kuwait City.
He added that the economies of East Asian countries and China remain affected by COVID
-19 and caution must be exercised. “There are meetings with OPEC countries, especially the Gulf Cooperation Council countries, and so far there are different views on how to handle this issue," Fares said.
The alliance might not change course easily as there are outages in North America affecting oil prices. Mexico has seen a halt of more than 400,000 bpd due to an offshore oil rig accident, while producers in the US are expecting decline in output due to a new storm hitting the US Gulf coast.
Oil and natural gas explorers in the US Gulf of Mexico and Louisiana refineries have begun shutting production ahead of Hurricane Ida. About 1.65 million bpd, or 91 percent of crude production, and 85 percent of gas output was shut-in as of Saturday, while 1.9 million bpd of refining capacity is shut, about 10 percent of the US total.
Ports from southern Louisiana to Mississippi were closed on Sunday morning as Hurricane Ida raced toward the US Gulf Coast as an extremely dangerous Category 4 storm. The Louisiana Offshore Oil Port, the largest privately owned crude terminal in the US, had also halted deliveries ahead of the storm, according to a notice on its website.
“The market east of Suez is weakening but it’s hard to see this coming as many countries within OPEC+ already like the UAE want to increase their output more, and there is pressure from consumers to bring down prices,” Abdulsamad Alawadhi, a London-based independent analyst and former Kuwaiti oil executive, told Arab News.
Analysts are already fixed on seeing OPEC+ maintains course, Bloomberg said on Friday based on a survey.
The US has urged OPEC and its allies to boost oil output to tackle rising gasoline prices that it views as a threat to the global economic recovery. Asked about the US call, Fares said OPEC+ members had different views on the matter.
"I agree with the minister’s sentiment, but it only reflects his position and I don't think it reflects that of the group," he added.
The OPEC+ coalition’s careful stewardship of the oil market has kept prices high enough to support the revival of the global petroleum industry, and largely avoided the kind of spike that could threaten the world’s economic recovery. They already restarted roughly 45 percent of the unprecedented production volume shuttered last spring.