OPEC+ Agrees To Gradual Output Hikes

OPEC+ Agrees To Gradual Output Hikes

Update (1150ET):  OPEC+ has indeed agreed to output cuts as follows, and as leaked earlier:

  • 350k BPD in May
  • 350k BPD in June
  • 450k BPD in July

And as also leaked earlier, the Saudis will roll back their unilateral 1mmb/d oil cut over the next 3 months, adding output as follows:

  • 250k BPD in May
  • 350k BPD in June
  • 400k BPD in July


* * *

Update (1130ET): The leaks are coming thick and fast now with reports that delegates have agreed to gradually raise output over the next few months.

Amena Bakr reports: “This is what the easing will look like for the group: May 350k, June 350k and July 450k”

Saudi Arabia will gradually bring into the market, during the next three months, its voluntary one million reduction, according to Reza Zandi.

And WTI just cannot make its mind up…

A reminder of the tensions the alliance faces: While Saudi Arabia is making deep cuts to its exports – 1 million barrels a day since December – Iraq is keeping its own sales up near a nine-month high. Meanwhile, Libya, not part of the supply-management pact, is exporting the most in at least seven years.

*  *  *

WTI has given up its overnight gains… again… after the now standard leak headlines “from an anonymous delegate” spooked the market.

Most members are reportedly giving support to a one-month extension, but the outcome isn’t decided and delegates say there are some countries that would prefer to increase production.

“The situation is not clear yet,” one delegate cautions.

OPEC+ nations are discussing not just what to do in May, but also about the next few months.

Oil demand is expected to grow significantly during the northern hemisphere summer. It will also grow in the Middle East, where countries like Saudi Arabia consume vast amounts of crude to run power plants harder and meet air-conditioning demand. So,as Bloomberg’s Javier Blas notes, we may have a two-pronged OPEC decision, with one message for May and another one for June and after.

And the delegates are now debating a proposal for gradual output hikes.

This sent WTI back below $60 and into the red for the day…

As Bloomberg’s Julian Lee notes, in theory, the group can make three more increases of 500,000 barrels a day before it has restored the full 2 million barrels that it originally planned to return in January. But Russia and Kazakhstan have already had most of their shares of that increase. Russia’s target can only increase by another 115,000 barrels a day and Kazakhstan’s by just 18,000 barrels until they’ve had their full shares of the original increase of 2 million barrels a day.

That’s going to mean they’ll soon have to watch others getting increases they don’t share in, or that the others will have to agree to lift Russia and Kazakhstan’s shares of the group’s collective output – something that’s always been difficult for OPEC in the past.

So what will OPEC+ finally do?

Tyler Durden
Thu, 04/01/2021 – 11:30

ZeroHedge News

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