The last sentence is the most important because there was fear that UAE would leave OPEC and ramp up production.
OPEC and its non-OPEC allies reached a deal Sunday to phase out 5.8 million barrels per day of oil production cuts by September 2022. Coordinated easing of oil cuts for the group, known as OPEC+, will begin in August, OPEC announced in a statement.
The agreement followed a temporary but unprecedented gridlock that began in early July and saw the United Arab Emirates reject a coordinated oil production plan for the group spearheaded by its kingpin, Saudi Arabia.
Abu Dhabi (UAE) had demanded that its own "baseline" for crude production — the maximum volume it's recognized by OPEC as being able to produce — be raised because this figure then determines the size of production cuts and quotas it must follow as per the group's output agreements. Members cut the same percentage from their baseline, so having a higher baseline would allow the UAE a greater production quota.
The UAE's enthusiasm for Sunday's deal was evident in the opening statement from Emirati Energy Minister Suhail Al Mazroui.
"We appreciate the constructive dialogue we had with his highness and OPEC," Al Mazroui told journalists on a press call, referring to Saudi Energy Minister Abdulaziz Bin Salman. "I confirm that UAE is committed to this group and will always work with it and within this group to do our best to achieve the market balance and help everyone. The UAE will remain a committed member in the OPEC alliance."
OPEC+ gets a deal done with UAE
OPEC+ gets a deal done with UAE
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: OPEC+ gets a deal done with UAE
As I pointed out in my July 17th podcasts, the OPEC+ production increases of 400,000 bbls per day per month are not enough to meet current demand. Above ground inventories will keep falling.
Wall Street Journal
OPEC and its Russia-led oil-producing allies agreed to unleash millions of barrels of bottled-up crude over the next two years, committing to restore all of the cuts they made at the start of the pandemic as economies pick up and crude demand recovers.
The group agreed to add new oil in modest installments over many months, underscoring the still-uncertain speed of the world’s economic recovery. Much of the developing world, where demand growth for oil had been strongest pre-pandemic, is still fighting surging Covid-19 cases.
Sunday’s oil deal calls for the Organization of the Petroleum Exporting Countries and a Russia-led group of big producers to increase production by 400,000 barrels a day each month through the latter part of 2022. The deal seeks to unwind all the cuts the two groups, collectively called OPEC+, agreed to make at the start of the pandemic, when economies were shuttering and demand sputtering.
The group said it would reassess market conditions in December. The deal goes into effect next month.
Per IEA global demand for oil exceeded supply by 1.2 million barrels per day in June and it looks like the shortage has increased in July. Just in the U.S., crude oil inventories above ground have declined by more than 30 million barrels over the four weeks ending July 9 as confirmed by EIA.
Wall Street Journal
OPEC and its Russia-led oil-producing allies agreed to unleash millions of barrels of bottled-up crude over the next two years, committing to restore all of the cuts they made at the start of the pandemic as economies pick up and crude demand recovers.
The group agreed to add new oil in modest installments over many months, underscoring the still-uncertain speed of the world’s economic recovery. Much of the developing world, where demand growth for oil had been strongest pre-pandemic, is still fighting surging Covid-19 cases.
Sunday’s oil deal calls for the Organization of the Petroleum Exporting Countries and a Russia-led group of big producers to increase production by 400,000 barrels a day each month through the latter part of 2022. The deal seeks to unwind all the cuts the two groups, collectively called OPEC+, agreed to make at the start of the pandemic, when economies were shuttering and demand sputtering.
The group said it would reassess market conditions in December. The deal goes into effect next month.
Per IEA global demand for oil exceeded supply by 1.2 million barrels per day in June and it looks like the shortage has increased in July. Just in the U.S., crude oil inventories above ground have declined by more than 30 million barrels over the four weeks ending July 9 as confirmed by EIA.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: OPEC+ gets a deal done with UAE
AP: OPEC and allied nations agreed Sunday to raise the production limits imposed on five countries next year and boost their production by 2 million barrels per day by the end of this year, ending a dispute that roiled oil markets. < This is the same as their original plan.
The disagreement, sparked by a demand by the United Arab Emirates to increase its own production, temporarily upended an earlier meeting of the cartel. In a statement Sunday, the cartel announced that Iraq, Kuwait, Russia, Saudi Arabia and the UAE would see their limits rise.
“What bonds us together is way much beyond what you may imagine,” Saudi Energy Minister Prince Abdulaziz bin Salman said. “We differ here and there but we bond.”
Prince Abdulaziz declined to elaborate on how they came to that consensus, saying it would see the cartel “lose our advantage of being mysterious and clever.” But he clearly bristled at earlier reports on the dispute between Saudi Arabia, long the heavyweight of the Vienna-based cartel, and the UAE.
Prince Abdulaziz deferred at the beginning of a news conference afterward to al-Mazrouei in a sign of respect.
“The UAE is committed to this group and will always work with it and within this group to do our best to achieve the market balance and help everyone,” al-Mazrouei said. He praised the deal as a “full agreement” among all the parties.
Outside of OPEC, however, tensions still remain between the neighboring nations. The UAE largely has withdrawn from the Saudi-led war in Yemen, while also diplomatically recognizing Israel. Saudi Arabia also has opened its doors to Qatar again after a years long boycott, though relations remain icy between Abu Dhabi and Doha. Saudi Arabia also has aggressively sought international business headquarters — something that could affect the UAE's business hub in Dubai.
Abu Dhabi's powerful Crown Prince Mohammed bin Zayed, the country's de facto ruler, and Saudi Crown Prince Mohammed bin Salman have been close though over the years. The two leaders likely will meet Monday in Saudi Arabia.
Under the new production limits, the UAE would be able to produce up to 3.5 million barrels of crude oil a day beginning in May 2022. That's below the 3.8 million barrels a day it reportedly sought. Saudi Arabia's limit of 11 million barrels a day would rise to 11.5 million, as would Russia's. Iraq and Kuwait saw smaller increases.
In its statement, OPEC acknowledged oil prices continued to improve.
“Economic recovery continued in most parts of the world with the help of accelerating vaccination programs,” the cartel said.
Prince Abdulaziz also mentioned OPEC members Algeria and Nigeria had raised concerns about their production limits as well.
Benchmark Brent crude oil traded around $73 a barrel Friday.
Once muscular enough to grind the U.S. to a halt with its 1970s oil embargo, OPEC needed non-members like Russia to push through a production cut in 2016 after prices crashed below $30 a barrel amid rising American production. That agreement in 2016 gave birth to the so-called OPEC+, which joined the cartel in cutting production to help stimulate prices.
OPEC+ agreed in 2020 to cut a record 10 million barrels of crude a day from the market to boost prices. It's slowly added some 4.2 million barrels back over time.
Beginning this August, the cartel said it separately will increase its production by 400,000 barrels a day each month through December — a total of 2 million barrels. The cartel then will assess plans on whether to phase out its current 5.8 million barrel of oil production cut by the end of 2022 as planned by the initial agreement.
OPEC member nations include Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the UAE and Venezuela. Members of the so-called OPEC+ include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan.
Prince Abdulaziz, in praising Sunday’s agreement, offered a cheery assessment of the future despite the recent turmoil, suggesting at one point the enlarged group might last beyond the expiration of the cuts next year.
“OPEC+ is here to stay,” the prince proclaimed. < This is EXTREMELY IMPORTANT.
The disagreement, sparked by a demand by the United Arab Emirates to increase its own production, temporarily upended an earlier meeting of the cartel. In a statement Sunday, the cartel announced that Iraq, Kuwait, Russia, Saudi Arabia and the UAE would see their limits rise.
“What bonds us together is way much beyond what you may imagine,” Saudi Energy Minister Prince Abdulaziz bin Salman said. “We differ here and there but we bond.”
Prince Abdulaziz declined to elaborate on how they came to that consensus, saying it would see the cartel “lose our advantage of being mysterious and clever.” But he clearly bristled at earlier reports on the dispute between Saudi Arabia, long the heavyweight of the Vienna-based cartel, and the UAE.
Prince Abdulaziz deferred at the beginning of a news conference afterward to al-Mazrouei in a sign of respect.
“The UAE is committed to this group and will always work with it and within this group to do our best to achieve the market balance and help everyone,” al-Mazrouei said. He praised the deal as a “full agreement” among all the parties.
Outside of OPEC, however, tensions still remain between the neighboring nations. The UAE largely has withdrawn from the Saudi-led war in Yemen, while also diplomatically recognizing Israel. Saudi Arabia also has opened its doors to Qatar again after a years long boycott, though relations remain icy between Abu Dhabi and Doha. Saudi Arabia also has aggressively sought international business headquarters — something that could affect the UAE's business hub in Dubai.
Abu Dhabi's powerful Crown Prince Mohammed bin Zayed, the country's de facto ruler, and Saudi Crown Prince Mohammed bin Salman have been close though over the years. The two leaders likely will meet Monday in Saudi Arabia.
Under the new production limits, the UAE would be able to produce up to 3.5 million barrels of crude oil a day beginning in May 2022. That's below the 3.8 million barrels a day it reportedly sought. Saudi Arabia's limit of 11 million barrels a day would rise to 11.5 million, as would Russia's. Iraq and Kuwait saw smaller increases.
In its statement, OPEC acknowledged oil prices continued to improve.
“Economic recovery continued in most parts of the world with the help of accelerating vaccination programs,” the cartel said.
Prince Abdulaziz also mentioned OPEC members Algeria and Nigeria had raised concerns about their production limits as well.
Benchmark Brent crude oil traded around $73 a barrel Friday.
Once muscular enough to grind the U.S. to a halt with its 1970s oil embargo, OPEC needed non-members like Russia to push through a production cut in 2016 after prices crashed below $30 a barrel amid rising American production. That agreement in 2016 gave birth to the so-called OPEC+, which joined the cartel in cutting production to help stimulate prices.
OPEC+ agreed in 2020 to cut a record 10 million barrels of crude a day from the market to boost prices. It's slowly added some 4.2 million barrels back over time.
Beginning this August, the cartel said it separately will increase its production by 400,000 barrels a day each month through December — a total of 2 million barrels. The cartel then will assess plans on whether to phase out its current 5.8 million barrel of oil production cut by the end of 2022 as planned by the initial agreement.
OPEC member nations include Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the UAE and Venezuela. Members of the so-called OPEC+ include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan.
Prince Abdulaziz, in praising Sunday’s agreement, offered a cheery assessment of the future despite the recent turmoil, suggesting at one point the enlarged group might last beyond the expiration of the cuts next year.
“OPEC+ is here to stay,” the prince proclaimed. < This is EXTREMELY IMPORTANT.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group