BAKU, Azerbaijan, Nov.5
By Leman Zeynalova – Trend:
The gradual increase in OPEC+ output will flip the oil market into a surplus, Trend reports with reference to Capital Economics, the UK-based research and consulting company.
OPEC+ left policy unchanged and re-iterated its intention to add another 400,000 bpd in December.
“Thereafter, there is no pre-announced schedule for production increases but the group has pledged to remove all output cuts, or so-called “production adjustments”, by September 2022. We had always suspected that OPEC+ would leave its proposed quotas unchanged this month, despite loud calls for higher production from many countries, including the US, Japan and India. Many OPEC+ member states, notably Nigeria and Angola, are already struggling to meet their current production quotas. So if OPEC+ were to raise quotas, these countries would lose revenue as – more than likely – it would result in lower oil prices,” the company said.
Capital Economics believes that prices of over $80 per barrel are, of course, another reason why OPEC+ will not be in any hurry to add supply to the market, particularly given that US producers have shown little inclination to raise output.
“That said, we think that the gradual increase in OPEC+ output over the course of next year, along with growth in non-OPEC oil output, will flip the oil market into a surplus. As a result, we forecast that the price of Brent will fall to around $60 per barrel at end-2022.”
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