OPEC+ makes first post-UAE production decision
The seven countries are widely expected to increase their quotas by 188,000 barrels per day.
The seven countries are widely expected to increase their quotas by 188,000 barrels per day.
VIENNA, Austria (AFP) — Seven OPEC+ members are meeting Sunday to make their first decision on oil-production quotas since the United Arab Emirates’ (UAE) departure from the cartel, which added to the soaring price pressure unleashed by the Mideast war.
The UAE, one of the world’s top producers, announced 28 April it was withdrawing from the Organization of the Petroleum Exporting Countries (OPEC) and the expanded OPEC+ group, after chafing at their production quotas. The withdrawal took effect on Friday.
Neither group has reacted publicly so far — meaning there will be intense focus on the tone of the statement at the end of Sunday’s online meeting by Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia and Saudi Arabia.
The production decision itself is already priced in by markets. The seven countries are widely expected to increase their quotas by 188,000 barrels per day (bpd), according to Arne Lohmann Rasmussen, chief analyst at Global Risk Management.
That is similar to a 206,000-barrel daily increase announced in March and April, subtracting the portion allotted to the UAE.
Quota question mark
But raising the quota on paper may not have much impact on actual production, which is already short of the limit.
Untapped OPEC+ reserves are mainly located in the Gulf region, and exports there are trapped by the blockade of the vital Strait of Hormuz, imposed by Iran in response to the United States-Israeli strikes that started the war on 28 February.
“Total OPEC+ output with quota fell to 27.68 million bpd in March, against a monthly quota of 36.73 million bpd, a shortfall of approximately 9 million bpd driven almost entirely by war-related disruption rather than voluntary restraint,” said Priya Walia, an analyst at Rystad Energy.
The blockade is hitting Iraq, Kuwait, Saudi Arabia and the UAE. The latter’s production will no longer count towards OPEC quotas.
Iran, whose exports are now the target of a retaliatory US blockade, is an OPEC+ member but is not subject to quotas.
Russia, the group’s second-biggest producer, has been the main beneficiary of the situation. But despite soaring energy prices, it appears to be struggling to produce at the level of its current quotas as its own war in Ukraine drags on.
