OPEC+ Settles for 648,000 bpd Outputs Hike in July, August

/ Oil & Gas / Friday, 03 June 2022 13:55

Following much anticipation from industry leaders and analysts,  the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, have agreed to raise output by 648,000 barrels per day (bpd) in July-August, up from 432,000 barrels a day in recent months.

The development comes after the 29th OPEC and non-OPEC Ministerial Meeting held via a videoconference. It took into account the economic recovery in major global economic centers after the pandemic, resulting in increased global refinery intake after seasonal maintenance.

It has been agreed to "advance the planned overall production adjustment for the month of September and redistribute equally the 0.432 mb/d production increase over the months of July and August 2022. Therefore, July production will be adjusted upward by 0.648 mb/d as per the attached schedule," OPEC said in a statement.

The members agreed to extend the compensation period until the end of December 2022 as requested by some underperforming countries and request that underperforming countries submit their plans by 17 June 2022. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting. They reiterate the critical importance of adhering to full conformity and to the compensation mechanism.

It has also been agreed to hold the 30th OPEC and non-OPEC Ministerial Meeting on 30 June 2022.

As one of the world’s top three producers, Russia was exporting about 5 million barrels a day of crude and another 2.5 million barrels of refined products before the war in Ukraine. OPEC can’t cover all those losses.

The OPEC member countries hold 79.4% of the world’s total proven oil reserves, with nearly 64.5% coming from Middle East alone, as per 2018 estimates.

The main objectives of the cartel is to keep the oil prices at a profitable level for its member countries and keep the oil market stable. The group also ensures that the member countries make uninterrupted supply and get a steady income. In addition, the cartel is also responsible for keeping the oil prices stable and adjusting the global oil supply.

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