The Organization of Petroleum Exporting Countries (OPEC) and non-member OPEC+ (a grouping of OPEC plus allied producers, including Russia) have agreed to a daily oil output of 648, 000 barrels per day in August.
The minor rise in the output indicates that the body is adhering to its moderate increase plan, despite widespread appeals to raise output in order to combat the commodity’s growing price.
However, analysts are concerned that, given countries’ failure to reach their permitted output quotas, such an increase may be ineffective.
For some time now, many countries like Angola, Nigeria and Libya in particular, have been unable to meet their output targets due to a lack of production capacities. Recall that in June, OPEC+ had announced it would increase its output during the summer, with monthly output for both July and August surpassing June’s by more than 200,000 barrels.
Meanwhile, Russian oil production continues to run at a high level. Russia’s oil production has so far not suffered as significantly as many initially assumed, but it is still well below what it produced before it invaded Ukraine- a move that has drawn global condemnation.
While the EU is planning to largely end Russian oil imports by the end of the year, countries like China and India have dramatically increased imports of Russian oil, which Moscow is selling with a discount of 25 to 30 per cent compared to the price of North Sea Brent.
At the meeting, the cartel also approved a production quota of 1.826million barrels per day for Nigeria in August 2022, representing an increase of 2,700b/d over what was approved for the country in June and July which stood at 1.772mb/d and 1.799mb/d respectively.
In the August 2022 Required Production, the organisation approved 1.525mb/d for Angola, while, Saudi Arabia and Russia recorded the highest production quota of 11.004mb/d.
The total volume targeted in the period in view is 43.854mb/d of which the OPEC 10 got the approval for 26.689mb/d and Non- OPEC 17.165mb/d.
Given the current oil market fundamentals and the consensus on its outlook, the OPEC and participating Non-OPEC oil-producing countries agreed to reaffirm the decision of the 10th OPEC and non-OPEC Ministerial Meeting on 12th April 2020 and further endorsed it in subsequent meetings including the 19th OPEC and non-OPEC Ministerial Meeting on the 18th July 2021.
The meeting, according to the statement, reconfirmed the production adjustment plan and the monthly production adjustment mechanism approved at the 19th and 29th OPEC and non-OPEC Ministerial Meetings and the decision to adjust upward the monthly overall production for August 2022 by 0.648 mb/d.
It “reiterated the critical importance of adhering to full conformity and the compensation mechanism. Compensation plans should be submitted under the statement of the 15th OPEC and non-OPEC Ministerial Meeting.