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OPEC+ agrees oil supply boost after UAE, Saudi reach compromise

CommoditiesJul 19, 2021 06:20AM ET
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© Reuters. FILE PHOTO: A 3D printed oil pump jack is seen in front of displayed OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

By Rania El Gamal, Olesya Astakhova and Ahmad Ghaddar

MOSCOW/DUBAI/LONDON (Reuters) -OPEC+ ministers agreed on Sunday to boost oil supply from August to cool prices which have climbed to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.

The group, which includes OPEC countries and allies like Russia, crucially agreed new production allocations from May 2022 after Saudi Arabia and others agreed to a request from the United Arab Emirates (UAE) that had threatened the plan.

"We are happy with the deal," UAE's Energy Minister Suhail bin Mohammed al-Mazroui told a news conference. Saudi energy minister Prince Abdulaziz bin Salman declined to answer questions on how the compromise was reached.

OPEC+ last year cut production by a record 10 million barrels per day (bpd) amid a pandemic-induced slump in demand and collapsing prices. It has gradually reinstated some supply to leave it with a reduction of about 5.8 million bpd.

From August until December 2021 the group will increase supply by a further 2 million bpd or 0.4 million bpd a month, OPEC said in a statement.[O/R] It aims to fully phase out cuts by around September 2022.

The group had agreed to extend their overall pact until the end of 2022 from an earlier planned date of April 2022, to leave more room for manoeuvre in case global recovery stalls due to new virus variants.

Whilst both Riyadh and the UAE had been supportive of an immediate output boost, the UAE had objected to the Saudi idea to extend the pact to December 2022 without getting a higher production quota.

To overcome the disagreement, OPEC+ agreed new output quotas for several members from May 2022, including the UAE, Saudi Arabia, Russia, Kuwait and Iraq.

The UAE will see its baseline production, from which cuts are being calculated, increase to 3.5 million bpd from May 2022 from today's 3.168 million.

Saudi and Russia will see their baselines rise to 11.5 million bpd each from the current 11 million. Iraq and Kuwait will see their baselines rise by 150,000 bpd each.

Prince Abdulaziz said Nigeria and Algeria could also see their baselines revised.

He said OPEC+ would adjust its policy if and when Iranian oil returned to the market if the country reached a deal with world powers over its nuclear programme.

Iran is estimated to be able to add some 1.5 million bpd to global supply once the deal is reached and Western sanctions are lifted.

OPEC+ agrees oil supply boost after UAE, Saudi reach compromise
 

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Comments (11)
Dave Watts
Dave Watts Jul 19, 2021 8:41AM ET
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I can't wrap my head around "an increase of 2 million bpd or .4 million bpd per month". How does 400,000 bpd = 2 million bpd?
Iwan kadarusman
Iwan kadarusman Jul 18, 2021 11:34PM ET
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i thought it's just transistory. Oil will be up
Remone Me
Remone Me Jul 18, 2021 5:19PM ET
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Deal is made! Going to $80
Randy Lahey
Randy Lahey Jul 18, 2021 5:19PM ET
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let's hope so.
Clifton Doucette
Clifton Doucette Jul 18, 2021 5:10PM ET
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100.00
Alan Rice
Alan Rice Jul 18, 2021 1:05PM ET
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Human Legacy: Planet Killers.
Boris Pevzner
Boris Pevzner Jul 18, 2021 1:05PM ET
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Brainwashed
Amanda Targaryen
Amanda Targaryen Jul 18, 2021 1:05PM ET
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Animal products kills the planet more..
shrikant deshmukh
shrikant deshmukh Jul 18, 2021 10:32AM ET
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will it touch $68 tomorrow
durga prasad
durga prasad Jul 18, 2021 10:32AM ET
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Christopher Peccia
Christopher Peccia Jul 18, 2021 9:20AM ET
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this should drive the price down bellow 70... right?
Deng Yishun
Deng Yishun Jul 18, 2021 9:20AM ET
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not really..Not that simple dude..
Franco Dominguez
Franco Dominguez Jul 18, 2021 9:20AM ET
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if you hv demand and not supply what happen with the price modafoca????
Johnny Hoo
Johnny Hoo Jul 18, 2021 9:20AM ET
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even with the output boost, the demand is still high
Kelly Mayer
Kelly Mayer Jul 18, 2021 9:20AM ET
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Demand is very high. Prices went down the past week because of these OPEC delays, where it should have gone up. Now the expected increase in bpd is coming, and that should stabilize oil in the 75 range, but it will likely hit 80 in the coming months. More production also means more profits for distributors and producers, since they profit alot from oil at these prices. Dont see how oil is coming down now that the OPEC dispute is handled, which was one of the main reasons oil dropped. If a drop happens, it will be temporary and not consistent with real world demand and earnings reports in the next coming weeks. plus, the OPEC 2021-2022 report was very bullish for oil.
Fluid Capital Investments
Fluid Capital Investments Jul 18, 2021 9:20AM ET
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Deng Yishun thank you for that reply brother.
Ivan Lazo
Ivan Lazo Jul 18, 2021 9:03AM ET
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With Trump gone, they are all back at it. And with hyperinflation looming, we are in for a ride.
Jakub Barej
Jakub Barej Jul 18, 2021 9:03AM ET
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If hyperinflation runs, trading will be banned. So do not be happy with that too much.
Bret Lafrance
Bret Lafrance Jul 18, 2021 9:03AM ET
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Really, “with Trump Gone”, why perpetuate the lunacy? He stirred this pot weekly.
Joseph Armour
Joseph Armour Jul 18, 2021 8:41AM ET
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You can't have your cake and eat it too. You either want to reduce carbon emissions and other ecologically damaging businesses, or you want cheap oil and gas. Make up your mind.
Gallina Vladimirovich
Gallina Vladimirovich Jul 18, 2021 8:41AM ET
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Do you really think The Kremlin cares about the issue of carbon emissions? No more than the Kims care the well being of the people of North Korea.
Jakub Barej
Jakub Barej Jul 18, 2021 8:41AM ET
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Gallina Vladimirovich  Communists in Europe and America cares how to hit people with their insane ideas. They want deprive us of freedom and oil.
New Jazenevd
New Jazenevd Jul 18, 2021 7:18AM ET
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OPEC is in driving seat again. Thanks to Burisma Joe and his quota-filled administration.
Rick Baier
Rick Baier Jul 18, 2021 6:17AM ET
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I would personally like to thank Joe Biden for enslaving the American people once again to OPEC. I love the highest gas prices in 7 years and rising groceries at the stores. Couldn't of achieved it without your expertise.
Ricardo Diogo
Rcd72 Jul 18, 2021 6:17AM ET
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better to thank the FED for the irresponsible liquidity...to force inflation to record high of 30 y!
perplexed76 .
perplexed76 . Jul 18, 2021 6:17AM ET
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calm down it's temporary, 7$ for barrel is coming
Randy Lahey
Randy Lahey Jul 18, 2021 6:17AM ET
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Here's the deal.............buy my son's crayon scrawls, bidding starts at $500,000 a piece.
 
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