BAKU, Azerbaijan, Jan.7
By Leman Zeynalova – Trend:
Only Russia and Kazakhstan have been given an increase in quota, by 75,000 b/d in total between them as part of the OPEC+ deal, Wood Mackenzie’s vice president Ann-Louise Hittle told Trend.
That does not have a significant effect on prices because it is offset by the large reduction in output by Saudi Arabia.
An unexpected supply outage would cause the Saudis to increase production to offset the loss and prevent a steep and dramatic rise in price or a shortfall to meet demand. Another factor would be a colder than normal winter in the Northern Hemisphere which could drive strong oil demand that tightens the market during February and March.
OPEC+ agreed to lift oil production by 75,000 barrels per day over January levels.
But Saudi Arabia’s late announcement after the meeting sent oil prices soaring—that Saudi Arabia would voluntarily cut an additional 1 million barrels per day in February and March above its current quota—all while OPEC’s allies get to ramp up production.
The OPEC+ agreed not only for the production levels for February but for March as well. March’s production level will see an additional increase of 120,000 barrels per day over February levels, or 195,000 bpd over January levels.
With March’s production quotas already set, the February meeting, therefore, will set production quotas for April. The previous meeting held in December adjusted the total production cuts to 7.2 million bpd for January, from 7.7 million bpd before.
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