OPEC+ announces supply boost

OPEC + ministers on Sunday agreed to increase oil supplies from August to cool prices, which have soared 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, essentially agreed on new production allotments starting in May 2022 after Saudi Arabia and others agreed to a request from the United Arab Emirates (UAE) that put the plan at risk. "We are happy with the deal," said the UAE energy minister, Suhail bin Mohammed al-Mazroui, at a press conference. Saudi Energy Minister Prince Abdulaziz bin Salman declined to answer questions about how the compromise came about. OPEC + cut production by a record 10 million barrels per day (bpd) last year amid a pandemic-induced slump in demand and collapsing prices. It gradually resumed part of the supply, leaving a cut of around 5.8 million bpd. From August to December 2021, the group will increase supply by a further 2 million bpd, or 0.4 million bpd per month, OPEC said in a statement. \[O / R\] It plans to fully phase out the cuts by around September 2022 . The group had agreed to extend their overall pact from an earlier planned date in April 2022 to the end of 2022 in order to have more room for maneuver if the global recovery stalled due to new virus variants. While both Riyadh and the UAE had advocated an immediate increase in production, the UAE disagreed with the Saudi idea of ​​extending the pact until December 2022 without receiving a higher production quota. To overcome the discrepancies, OPEC + agreed new production quotas for several members from May 2022, including the UAE, Saudi Arabia, Russia, Kuwait and Iraq. For the UAE, the base production from which the cuts are calculated will be increased to 3.5 million bpd from May 2022 from 3.168 million today. For Saudi Arabia and Russia, the base production will be increased from the current 11 million bpd to 11.5 million bpd each. Iraq and Kuwait will increase their baselines by 150,000 bpd each. Prince Abdulaziz said Nigeria and Algeria could also see their baselines revised. He said OPEC + would adjust its policies if and when Iranian oil returns to the market if the country reaches an agreement with world powers on its nuclear program. It is estimated that once the deal is reached and Western sanctions lifted, Iran will be able to add about 1.5 million bpd to global supply.